Enel DF 2006

ANNUAL REPORT 2006
The Consolidated Financial Statements of the Enel Group included in this

Annual Report have been prepared in accordance with international
accounting standards, which differ in certain respects from accounting
principles generally accepted in the United States (“US GAAP”).
Such Statements do not include any reconciliation to US GAAP. The
Annual Report on Form 20-F, which we expect to issue no later than June
30, 2007, will include a reconciliation of Enel’s consolidated net income
and shareholders’ equity, as determined under international accounting
standards, with that under US GAAP, together with the accompanying
explanatory notes.
Contents
Report on operations
The Enel structure .......................................................................................................... 7
Corporate boards............................................................................................................ 9
Letter to shareholders and stakeholders ...................................................................... 10
Summary of results ...................................................................................................... 15
Enel and the financial markets...................................................................................... 18
Significant events in 2006............................................................................................. 22
Regulatory and rate developments............................................................................... 28
Overview of the Group’s performance and financial position. ...................................... 31
Results by Division ....................................................................................................... 48
• Domestic Sales ................................................................................................. 52
• Domestic Generation and Energy Management............................................... 59
• Domestic Infrastructure and Networks.............................................................. 72
• International ...................................................................................................... 80
• Parent Company and Other Activities............................................................... 90
Outlook ......................................................................................................................... 92
Research and development.......................................................................................... 93
Human resources and organization.............................................................................. 95
Stock option plans ...................................................................................................... 100
Reconciliation of shareholders’ equity and net income of Enel SpA
and the corresponding consolidated figures .............................................................. 110
Consolidated financial statements

Consolidated Income Statement................................................................................. 113
Consolidated Balance Sheet ...................................................................................... 114
Consolidated Statement of Cash Flows...................................................................... 116
Statement of Profits and Losses Recognized for the Period ...................................... 117
Notes to the financial statements ........................................................................... 118
Attachments
Report on corporate governance ................................................................................ 212
Subsidiaries, associates and other significant equity investments
of the Enel Group at December 31, 2006 ................................................................... 248
Glossary ................................................................................................................... 264

Report on operations
The Enel structure
Corporate
Enel SpA
Domestic Generation
and Energy Management Domestic Infrastructure
Domestic Sales Division Division and Networks Division
> Enel Distribuzione > Enel Produzione > Enel Distribuzione
> Enel Energia > Enel Trade > Enel Rete Gas
(formerly Enel Gas) (1)
> Enel.si > Enel Sole
> Deval > Deval
Services and
International Division Other Activities
> Enel Viesgo Generación (2) > Enel Viesgo Energía > Enel Servizi
> Slovenské elektrárne > Enel Electrica Banat > Sfera
> Enel Maritza East 3 (formerly > Enel Electrica Dobrogea > Dalmazia Trieste
Maritza East III Power Company)
> Enel Operations Bulgaria > Electra de Viesgo Distribución > Enelpower
(formerly Maritza East 3
Operating Company)
> Enel North America > Enel Servicii > Enel.NewHydro
> Enel Latin America > Enel Viesgo Servicios > Enel.Factor
> Enel Panama > Enel Unión Fenosa Renovables > Enel.Re
> RusEnergoSbyt > Erelis
(1) As from January 1, 2006 Enel Energia was merged into Enel Gas; following the merger, the surviving company changed its name to Enel Energia.
(2) As from January 1, 2006 Enel Viesgo Renovables was merged into Enel Viesgo Generación.
7
The Domestic Sales Division operates in the end-user market for electrical power and
gas in Italy, developing an integrated package of products and services for the various
customer segments and ensuring that commercial services meet quality standards.
The Domestic Generation and Energy Management Division is responsible for
generating power at competitive costs while safeguarding the environment.
The mission of the Domestic Infrastructure and Networks Division is to distribute
electricity and gas, optimizing the management of networks and ensuring the efficient
operation of measurement systems and compliance with technical service quality
standards.
The International Division’s mission is to support Enel’s international growth strategy,
which requires a strengthening of skills in research, analysis and identification of
opportunities for acquisitions as well as in managing and integrating foreign operations
in the electricity and gas markets.
Each of these Divisions, together with the Parent Company and Services and Other
Activities segments, are considered by management in assessing Group performance.
8
Corporate boards
Board of Directors Board of Auditors
Chairman Chairman
Piero Gnudi Eugenio Pinto
Chief Executive Officer and General Manager Auditors

Fulvio Conti Carlo Conte
Franco Fontana
Directors
Giulio Ballio Alternate auditors
Augusto Fantozzi Giancarlo Giordano
Alessandro Luciano Paolo Sbordoni
Fernando Napolitano
Francesco Taranto
Gianfranco Tosi Independent auditors
Francesco Valsecchi KPMG SpA
Secretary
Claudio Sartorelli
Powers
Board of Directors
The Board is vested by the bylaws with the broadest powers for the ordinary and
extraordinary management of the Company, and specifically has the power to carry out
all the actions it deems advisable to implement and attain the corporate purpose.
Chairman of the Board of Directors

The Chairman is vested by the bylaws with the powers to represent the Company
legally and to sign on its behalf, presides over Shareholders’ Meetings, convenes and
presides over the Board of Directors, and ascertains that the Board’s resolutions are
carried out. Pursuant to a Board resolution of November 30, 2005, the Chairman has
been vested with a number of additional non-executive powers.
Chief Executive Officer

The Chief Executive Officer is also vested by the bylaws with the powers to represent
the Company legally and to sign on its behalf, and in addition is vested by a Board
resolution of November 30, 2005 with all powers for managing the Company, with the
exception of those that are otherwise assigned by law or the bylaws or that the
aforesaid resolution reserves for the Board of Directors.
9
Letter to shareholders and stakeholders
Dear shareholders and stakeholders,
In 2006 we achieved and exceeded all of the objectives that we had set ourselves. We
continued the pursuit of our international growth strategy, consolidating our positions in
European markets.
Our actions had a positive impact on Group results. In 2006 the gross operating margin
rose by 3.5% compared with the previous year, while Group net income, equal to
€3,036 million, improving on 2005 net of the gain on the sale of Terna (€1,153 million).
Thanks to this performance, we are able to propose that the Shareholders’ Meeting
approve a dividend of €0.49 per share, up €0.05 with respect to the previous year.
Having completed the re-focusing on our core business, today Enel is strongly
positioned to continue its drive for efficiency and growth with the goal of becoming a
leading integrated operator in the European electricity and gas market.
Our Group has the human, technical and financial resources it needs to achieve the
excellence and leadership goals we have set ourselves.
From an organizational point of view, the full implementation of our new divisional
structure, with three domestic Divisions and the International Division has already
generated considerable synergies for the entire Group, enabling us to focus our skills in
the businesses in which we operate.
The increasing size we have already achieved in our international operations has also
made it necessary to expand the focus of the action of this Division beyond growth to
encompass the integration and operational excellence of the businesses we have
already acquired. International growth is one of our strategic priorities, and is an
opportunity for Enel to participate successfully in the consolidation of energy markets,
making the Group’s financial structure more efficient.
On the efficiency front, we have launched a cross-cutting project involving the entire
Group, both in Italy and abroad, aimed at pursuing operational excellence (Project
Zenith), which also I expect to produce significant cost savings beginning this year and
continuing in the years to come. To finance this major operating efficiency program, we
made an appropriate provision in 2006.
10
Developing technological and environmental leadership is one of the strategic
objectives of our Company. As part of the Environment and Innovation Project, we
have established additional investment plans in the field of renewable energy
resources and initiatives to promote research and development for environmental
sustainability. We have already made significant progress, but we believe that new
forces and resources are necessary because the challenge of climate change requires
an immediate response and the capacity to innovate to build a better future. The
Environment and Innovation Project, which provides for more than €4 billion in
investment by 2011 for research, renewable resources, development, innovation and
the application of cutting-edge technologies, represents an unprecedented effort by
Enel, one with few parallels anywhere in the world.
This journey will make Enel one of the leaders of the European energy market, with the
goal of being one of the most efficient and dynamic operators.
Domestic Sales Division

In 2006 the Domestic Sales Division completed its reorganization and is now ready to
take up the challenges of the full opening of the electricity market, which is scheduled
to take place in July 2007. Our Company has already made a substantive contribution
to accelerating the opening of the electricity market and, at December 31, 2006, had
some 300,000 customers in the free market. This achievement is the result of a major
commercial effort, which involved an expansion of our service offers to enable
customers large and small to protect themselves from fluctuations in the cost of fuels
(“secure year” and “friendly price”). We also continue to offer “pure energy”, for the sale
of certified renewable power.
The variety of customized offers made possible by the digital meter was increased
even further, enabling customers with special consumption needs to make significant
savings.
In the gas sector, in 2006 we acquired about 200,000 new customers, an increase of
about 9%, bringing our customer base to more than 2.3 million.
Domestic Generation and Energy Management Division

In 2006 Enel generated 104 TWh of power in Italy, down 7% compared with 2005. The
decline in volumes, which was in line with our forecasts, is essentially attributable to the
increase in generation by other producers in response to the greater demand on the
Italian power grid and the reconversion program involving a number of our power
plants.
11
With the implementation of our investment program, we have been transforming some
of our old fuel-oil plants into new, more efficient gas combined-cycle facilities (11 plants
have already entered service and one is under construction). We have also initiated
projects that exploit new clean-coal generation technologies, one under construction at
Civitavecchia and another being approved at Porto Tolle.
In 2006 a further 100 MW of renewables capacity entered service, while the plan
provides for some €1.6 billion in new investment for development and maintenance,
with the goal of generating more than 30% of our power with renewable energy
resources. This program will give us a more balanced mix of fuels and more efficient
plants, thereby reducing the cost of electricity generated in Italy while reducing specific
emissions.
Our operational efficiency and safety projects, which actively involve and mobilize our
resources in a total quality approach, are expected to reduce operation and
maintenance costs even more (with a target reduction of 3% for 2007) and improve the
overall operation of our power plants.
Domestic Infrastructure and Networks Division

In addition to further enhancement of service quality (reducing interruptions by about
60% since 2001), the Domestic Infrastructure and Networks Division has developed
and implemented efficiency programs that have translated into improved profitability.
In 2006, the replacement of old meters with the new digital devices was substantially
completed and all the remote management functions are operational. With this project,
one of the largest recent infrastructure projects in Italy and the largest of its kind in the
world, we have achieved considerable savings in managing our customer relationships.
The new digital meter, together with other efficiency initiatives, has reduced our cash
cost per customer (this measures operating costs and network investments per
individual customer) by 32% with respect to 2001, saving some €1.3 billion a year.
In the gas area, in 2006 we consolidated our position as the number two gas distributor
in the country, surpassing 2 million customers and, thanks to the growing integration
with our electricity operations, we expect substantial operational improvements in the
future.
International Division
During 2006 Enel continued to expand abroad, achieving a total installed capacity of
more than 10,300 MW, exceeding 27,500 GWh of power generated and serving 2
million customers.
12
Last year we acquired Slovenské elektrárne, a company with more than 7,000 MW of
installed capacity, which we consider to be the key to our growth strategy in Central
Europe. In Romania, where we are already present with the distribution companies
Enel Electrica Banat and Enel Electrica Dobrogea, we also won the tender for
Muntenia Sud, bringing us more than 1.1 million new customers. Today, we are one of
the leading foreign investors in Romania, a country that shares considerable cultural
roots with Italy, where we also plan to expand our generating operations.
We have the opportunity to develop our presence in Bulgaria and we were also the first
Western company to enter Russia, a country that despite the challenges it presents is
now undertaking a major privatization program and represents what we see as the new
frontier of growth. In addition to operating a combined-cycle plant at St. Petersburg
since December 2000, last year Enel also acquired 49.5% of RusEnergoSbyt, one of
Russia’s leading energy trading companies.
Enel is strengthening its presence in Spain, where we have launched an investment

program worth more than €1.5 billion to upgrade our generation capacity and expand
our activity in renewables. In addition, with the acquisition of Erelis, Enel has entered
the promising market for wind power in France, with a project pipeline of some 500
MW.
Renewable energy resources are also a priority objective of Enel’s international growth
With an installed capacity of more than 4,100 MW, in addition to the more than 15,300
MW of renewables capacity in Italy, Enel is one of the world’s leading operators in this
sector. Our acquisitions of hydro plants in Panama, the wind power development
companies TradeWind and Snyder in North America, and 20 hydro plants in Brazil in
2006 form part of this strategy.
13
Outlook
Enel will continue its expansion in the markets it has targeted both by enhancing
efficiency through the closer integration of existing assets and making international
acquisitions. In particular, with the acquisition of a stake in Endesa and the key
agreements reached first with Acciona on the joint management of Endesa and then
with E.On on the withdrawal of its tender for Endesa in exchange for the transfer of a
number of assets, Enel took a significant step towards the creation of a major
European energy group with a substantial presence in Spain and the rest of the world.
In Italy we will be investing about €14 billion over the next five years to modernize
generation plants, increase efficiency and upgrade of our distribution networks, with an
ever greater focus on meeting the needs of our customers in an increasingly
competitive energy market.
The projects under way and all of our planned activities in the sectors of our business,
as well as the growth of our international activities, will also have a positive impact in
2007, improving our operating results even further.
The Chief Executive Officer

Fulvio Conti
14
Summary of results
Highlights
2006 2005
Income data (millions of euro)

Revenues 38,513 33,787
Gross operating margin 8,019 7,745
Operating income 5,819 5,538
(1)
Net income before minority interests 3,101 4,132
(1)
Group net income 3,036 3,895
Financial data (millions of euro)

Net capital employed 30,715 31,728
Net financial debt 11,690 12,312
Shareholders’ equity (including minority interests) 19,025 19,416
Cash flow from operations 6,756 5,693
(2)
Capital expenditure on tangible and intangible assets 2,963 2,829
Per share data (euro)

Group net income per share 0.49 0.63
Group shareholders’ equity per share in circulation at period-end 2.99 3.10
Operating data
(3)
Electricity sold by Enel (TWh) 159.8 156.3
(3) (4)
Electricity transported on the Enel distribution network (TWh) 267.6 260.7
Gas sales (billions of cubic meters) 5.9 6.7
- of which to end-users (billions of cubic meters) 4.5 5.1
Net electricity generated by Enel (TWh) 131.4 125.7

Employees at year-end (no.) 58,548 51,778
Market indicators
Average Brent oil price ($/bbl) 65.1 54.4
(5)
Average price of low-sulfur fuel oil ($/t) 314.0 272.9
(6)
Average price of coal ($/t fob) 48.2 46.4
Average dollar/euro exchange rate 1.256 1.244
Six-month Euribor rate (average for the year) 3.23% 2.24%
(1) Figures include the capital gain realized essentially on the disposal of Terna in the amount of €1,153 million.
(2) Excluding discontinued operations.
(3) Excluding sales to resellers.
(4) Including 1,472 million kWh of power wheeled in previous years but commercially recognized in 2005.
(5) Platt's CIF Med index.
(6) Coal Week International index for the mix considered by the Authority for Electricity and Gas.
15
Summary of results in 2006
In 2006 revenues amounted to €38,513 million, up 14.0% on 2005. The increase is
essentially attributable to increased revenues from international trading operations and
the generation and distribution activities of foreign subsidiaries.
The gross operating margin totaled €8,019 million, up €274 million or 3.5% on the
€7,745 million registered in 2005, thanks to the growth registered by the International
Division.
The gross operating margin for 2006 reflects a provision of €400 million in respect of an
operating excellence program that, among other things, will generate savings already
in 2007.
Operating income came to €5,819 in 2006, up €281 million or 5.1% on 2005. Of the
total rise, €263 million is attributable to the income generated by the exchange of Wind
and Weather shares.
Group net income amounted to €3,036 million in 2006, compared with €3,895 million in
2005, which included (under discontinued operations) the gain of €1,153 million
essentially realized on the disposal of 43.85% of Terna.
Net capital employed amounted to €30,715 million at December 31, 2006, 61.9% of
which financed by shareholders’ equity of €19,025 million and 38.1% by net financial
debt of €11,690 million.
Net financial debt at December 31, 2006 decreased by €622 million from its level at
December 31, 2005 primarily reflecting the disposal of 26.1% of the share capital of
Weather and the acquisition of 66% of Slovenské elektrárne and the consolidation of its
debt. The ratio of debt to equity at December 31, 2006 was 0.61, compared with 0.63
at end-2005.
16
Results by Division
Gross operating
Millions of euro Revenues margin Operating income
2006 2005 2006 2005 2006 2005
Domestic Sales 21,108 19,487 175 152 2 12

Domestic Generation and Energy Management 15,661 12,995 3,149 3,407 2,197 2,398
Domestic Infrastructure and Networks 5,707 5,532 3,418 3,398 2,589 2,628
International 3,068 1,858 918 485 519 307
Parent Company 1,178 1,118 177 67 423 53
Services and Other Activities 1,161 1,741 179 315 86 219
Eliminations and adjustments (9,370) (8,944) 3 (79) 3 (79)
Total 38,513 33,787 8,019 7,745 5,819 5,538
Millions of euro Operating assets Operating liabilities Capital expenditure

2006 2005 2006 2005 2006 2005
Domestic Sales 6,948 6,465 6,272 5,289 56 53

Domestic Generation and Energy Management 16,752 16,468 4,019 3,841 897 798
Domestic Infrastructure and Networks 16,875 15,708 4,042 3,567 1,459 1,570
International 10,008 4,282 4,037 813 467 299
Parent Company 1,013 1,263 1,275 1,604 13 11
Services and Other Activities 1,771 2,945 1,128 2,392 71 98
Eliminations and adjustments (3,352) (3,280) (2,884) (3,137) - -
Total 50,015 43,851 17,889 14,369 2,963 2,829
Employees (no.)
at Dec. 31, 2006 at Dec. 31, 2005
Domestic Sales 5,176 5,994

Domestic Generation and Energy Management 9,573 9,006
Domestic Infrastructure and Networks 24,701 25,769
International 13,861 5,024
Parent Company 652 569
Services and Other Activities 4,585 5,416
Total 58,548 51,778
17
Enel and the financial markets
2006 2005
Gross operating margin per share (euro) 1.30 1.26

Operating income per share (euro) 0.94 0.90
Group net earnings per share (euro) 0.49 0.63
(1)
Dividend per share (euro) 0.49 0.63
(2)
Pay-out ratio (%) 100 100
Group shareholders’ equity per share (euro) 2.99 3.10
Share price - 12-month high (euro) 7.89 7.48
Share price - 12-month low (euro) 6.54 6.32
Average share price in December (euro) 7.77 6.75
(3)
Market capitalization (millions of euro) 47,988 41,543
No. of shares outstanding at December 31 (millions) 6,176 6,157
(1) Dividend proposed by the Board of Directors on March 27, 2007 equal to €0.49 per share (of which €0.20 paid as an interim dividend in
November 2006).
(2) Calculated on Group net income.
(3) Calculated on average share price in December.
(1)
Current Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
Enel stock weighting in:

- MIB 30 index 8.09% 8.37% 8.75% 10.46%
- FTSE Electricity E300 index 18.83% 18.81% 23.22% 28.12%
(1)
Rating Current Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
Standard & Poor's Outlook Negative Negative Stable Stable

Medium/long-term A+ A+ A+ A+
Short term A-1 A-1 A-1 A-1
Moody's Outlook Negative Stable Stable Stable

Medium/long-term Aa3 Aa3 Aa3 A1
Short term P-1 P-1 P-1 P-1
(1) Figures updated to March 14, 2007.
The economic recovery in the euro area gained strength in 2006, with GDP growing by
2.7% compared with 1.4% in 2005. The ECB tightened its monetary policy stance,
raising the minimum bid rate on main refinancing operations to 3.50% at the end of the
year, followed by an additional increase to 3.75% in March 2007.
18
In this macroeconomic environment, 2006 was a positive year for the financial markets,
which benefited from abundant liquidity, the absence of strong macroeconomic strains
and solid corporate fundamentals.
The Italian stock market registered its fourth consecutive year of gains (the MIB index
rose 82.5% between the end of 2002 and the end of 2006), with trading volume
expanding further in the year to total more than €1,200 billion.
The other main European stock markets also performed well, with the FTSE 100
(United Kingdom) rising by more than 11%, the DAX index (Germany) by more than
21%, the CAC 40 (France) by more than 16% and the IBEX index (Spain) by more than
31%.
Against this background, Enel’s stock gain nearly 17%, closing the year at €7.815. In
February this year, however, it reached its highest level since June 2000, rising to
€8.395.
Last year also saw considerable activity in the utilities sector, with substantial takeover
bids being launched, mainly in Spain. Major operations included a counter-bid by E.On
for Endesa in February 2006 to block Gas Natural’s public tender offering for the
company in September 2005, and the Iberdrola bid for Scottish Power in November
2006.
At the end of February 2007, Enel announced that it had acquired 9.99% of Endesa
and entered into a series of share swaps giving it the option to raise that stake to
24.98%.
In November 2006 Enel paid an interim dividend on 2006 profits of €0.20 per share,
which together with the dividend of €0.44 paid in June brought total dividends paid
during the year to €0.64 per share.
Average daily trading volume in Enel stock was 42.5 million shares, compared with
40.7 million in 2005, a rise of 4.4%.
At December 31, 2006, the Ministry for the Economy and Finance held 21.14% of Enel,
while Cassa Depositi e Prestiti held 10.16% and other shareholders the remaining
68.70%. As of that date, no other shareholders held more than 2% of the share capital.
19
For further information we invite you to visit the Investor Relations section of our
corporate website (http://www.enel.it/azienda_en/investor_relations), which contains:
financial data, presentations, on-line updates on the share price;
information on corporate bodies and the regulations of shareholders’ meetings;
periodic updates on corporate governance issues.
We have also created a contact center for private investors (which can be reached by
phone at +39 (06) 8305 2081 or by e-mail at azionisti.retail@enel.it) and for institutional
investors (phone: +39 (06) 8305 7008, e-mail: investor.relations@enel.it).
20
Performance of Enel share price and the MIB 30, S&P MIB and FTSE Electricity E300 Indices
(daily trading volume/listed price) – January 2006 to March 14, 2007
Millions of shares Euro
400 10.00
350
9.00
300
8.00
250
200 7.00
150
6.00
100
5.00
50
0 4.00
5 6 6 6 6 06 6 6 6 6 6 6 6 7 7
-0 -0 -0 -0 r-0 - -0 l- 0 -0 -0 ct
-0 -0 -0 -0 -0
ec Ja
n e b ar A p ay Ju
n Ju ug ep O ov ec Ja
n e b
D F M M A S N D F
Volume ENEL IM Equity E3ELEC Index MIB30 Index SPMIB Index
21
Significant events in 2006
Disposal of stake in Wind

On February 8, 2006, Enel and Weather Investments (Weather), a company controlled
by Egyptian businessman Naguib Sawiris, completed the second and final phase of the
sale of Wind. Specifically, following the exercise by Weather of the call option provided
for in the agreements of May 2005, Enel sold a stake of 6.28% of Wind to a subsidiary
of Weather for €328 million in cash. Enel also transferred to Weather its remaining
30.97% stake in Wind in exchange for shares representing 20.9% of Weather. Taking
account of the 5.2% of Weather acquired in August 2005 in the first phase of the
transaction, at February 8, 2006 Enel held a total stake of 26.1% in that company.
Disposal of stake in Weather

On December 21, 2006 Enel agreed to a price of €1,962 million for its 26.1% in
Weather, which it had obtained in the Wind-Weather exchange of shares. The
agreement envisaged the sale of 10% of Weather to a wholly-owned Weather
subsidiary and the remaining 16.1% to its parent company Weather Investments II
S.à.r.l. (Weather II), a holding company controlled by Sawiris.
The first part of the price was settled with a payment of €1 billion at the time the
Weather stake was transferred, while a second payment of €962 million will be settled
within 18 months of the transfer. The second installment will earn interest in line with
market rates as from the date of the transfer. Payment of the second installment is
secured by the pledge (without voting rights) of the 26.1% of Weather share capital in
favor of Enel, and the agreement also provides for the assignment of Weather II’s
receivables due from Weather.
The accord also provides for an earn-out mechanism, which will supplement the price
due to Enel in the event Sawiris’ group should sell the Weather shares to other
investors at a price above that agreed with Enel within 18 months of the transfer. The
agreement also terminates the shareholders’ agreement between Enel and Sawiris
regarding the management of Weather.
At the end of the entire operation, Enel will have received a net cash price of €4,971
million, excluding interest on payment deferral granted to the buyer.
Sale of Carbones Colombianos del Cerrejón

On February 8, 2006, Enel finalized the sale of 100% of Carbones Colombianos del
Cerrejón. The company, which engages in exploration, feasibility assessment and
extraction activities (the latter at a coal mine in the Guaijra region of Colombia) in
mines and mineral deposits, was sold for a total net price of about $38 million.
22
Acquisition of Slovenské elektrárne AS
On April 28, 2006 Enel, in line with the terms of the contract signed on February 17,
2005, acquired 66% of Slovenské elektrárne AS (SE), the largest generating company
in Slovakia and the second-largest in Central and Eastern Europe. SE has a plant
portfolio with a gross generation capacity of about 7,000 MW (83% of Slovakia’s
capacity) well balanced between thermal, hydro and nuclear, which makes it possible
to generate electricity at highly competitive costs. The price for the operation was about
€840 million, on which Enel had paid a deposit of €168 million in 2005.
Disposal of 30% of Enel Unión Fenosa Renovables

On May 30, 2006 Enel and Unión Fenosa completed the sale of 30% of Enel Unión
Fenosa Renovables (Eufer), as Unión Fenosa exercised a call option to acquire the
shares from Enel. Eufer is now equally owned by the two companies.
As specified in the agreement signed in 2003, Unión Fenosa paid Enel €71.8 million.
The partners have agreed on the joint management of Eufer, with each having four
representatives on the eight-member board.
Tender for part of Romanian electricity grid

On June 5, 2006 Enel won the tender organized by the Romanian Government for the
sale of a majority stake in the Electrica Muntenia Sud SA power distribution company
(EMS). Enel offered €820 million to acquire 67.5% of EMS. The price includes both the
sale of the shares and a simultaneous capital increase. The closing is subject to
approval of the deal by the Romanian Government.
EMS serves the capital Bucharest and the surrounding regions of Ilfov and Giurgiu. It
has about 2,000 employees, and in 2005 it had revenues of about €398 million and net
income of about €20 million.
Acquisition of additional stake in Maritza East III Power Holding and the stake in
Maritza O&M Holding Netherlands BV
On June 14, 2006 Enel finalized the acquisition from Entergy Power Bulgaria Ltd
(Entergy) of 40% of Maritza East III Power Holding, a Dutch company that owns 73% of
Maritza East III Power Company (now Enel Maritza East 3), a Bulgarian company that
owns the Maritza East III power plant near Stara Zagora, in south-eastern Bulgaria.
Enel had already acquired 60% of Maritza East III Power Holding from Entergy in 2003,
taking the lead in modernizing and operating the lignite-fired Maritza East III power
plant, one of the country’s largest power plants with a capacity of 840 MW.
Enel also acquired from Entergy the entire share capital of Maritza O&M Holding
Netherlands BV, a Dutch company that owns 73% of Maritza East 3 Operating
23
Company (now Enel Operations Bulgaria), a Bulgarian company that operates and
maintains the Maritza East III power plant.
The remaining 27% of both Bulgarian companies is still owned by NEK, the Bulgarian
national electricity company.
Enel paid Entergy a total of €47.5 million to buy the stakes in Maritza East III Power
Holding (40%) and Maritza O&M Holding Netherlands (100%).
Acquisition of holding in RusEnergoSbyt, a Russian electricity trader

On June 21, 2006, in execution of the Memorandum of Understanding (MoU) of March
2, 2006, Enel completed the acquisition of half of RusEnergoSbyt LLC (RES), a
Russian company active in the energy trading market and controlled by Grigory
Berezkin, chairman of the ESN Group. In the transaction, Enel, acting through the
Dutch subsidiary Enel Investment Holding, acquired 49.5% of RES Holdings BV, a
Dutch company that owns 100% of RES, for $105 million, in line with the terms of the
MoU.
Disposal of power distribution and sale assets

On June 27, 2006, Enel and Hera signed the final contract for the disposal of the power
distribution and sale grid of 18 municipalities in the Province of Modena to Hera. The
price was set at €107.5 million.
The acquisition represents the execution of a preliminary agreement signed on March
13, 2006 and has been effective since the end of June. The business unit includes
more than 3,700 km of network, about 80,000 customers and 42 employees. The
transaction marks the completion of the agreement reached in the protocol of
understanding signed in February 2005 between Enel and Meta Modena, which has
been merged into Hera since January 1, 2006.
Acquisition of wind plants in France

On July 13, 2006, Enel finalized the acquisition of 100% of Erelis SAS, a French company
specialized in the development of wind plants, for €14.2 million. Erelis, which is based
near Lyon, was established in 2002. Projects under development amount to about 500
MW of power, of which 14 MW will become operational in 2007, 196 MW are at an
intermediate or advanced stage and about 290 MW at an initial development stage. The
projects are located in various regions in France. Erelis is also developing about 110
MW for third parties.
Acquisition of gas distribution and sales business in Sicily

On July 13, 2006 the purchase of 100% of Metansicula SpA (at the time of the transaction,
the sole owner of Metansicula Vendita Srl) for €12.5 million was formalized pursuant to the
24
share purchase agreement of May 31, 2006 and upon receipt of approval from the
Competition Authority. Metansicula, which distributes natural gas, and Metansicula
Vendita, which sells natural gas, currently provide services to about 15,000 customers in
the provinces of Catania, Siracusa and Ragusa. In 2005, the companies reported
consolidated revenues of about €5.3 million and distributed about 10 million cubic meters
of gas.
Acquisition of hydroelectric plants in Panama

On August 1, 2006, Enel, acting through its Dutch subsidiary Enel Investment Holding,
acquired 100% of Hydro Quebec International Latin America Ltd (HQILA) – now Enel
Panama – from Hydro Quebec International Inc. and Fonds de Solidarité des
Travailleurs du Québec. The operation effectively gives Enel an indirect stake of 24.5%
in Empresa de Generación Electrica Fortuna SA (Fortuna), a Panamanian hydro
generation company, which gives Enel joint de facto control over the company along
with Globeleq (a private equity fund). Enel will be responsible for running the Fortuna
plant.
Enel paid $150 million, equal to about €118 million at the acquisition date. Fortuna is
one of the leading Panamanian electricity companies, operating in the province of
Chiriquì with a 300 MW power plant. It generates a total of about 1,600 GWh a year,
giving it a 30% share of national power output. In 2005 Fortuna posted revenues of
$128.7 million, a gross operating margin of $97.8 million and operating income of $82.2
million.
Interim dividend for 2006 approved

On September 6, 2006 the Board of Directors of Enel SpA approved the distribution of
an interim dividend of €0.20 per share. The interim dividend was paid as from
November 23, 2006, with the ex-dividend date falling on November 20, 2006.
Acquisition of a relative majority stake in TradeWind Energy LLC

On September 26, 2006, Enel, through its subsidiary Enel North America, acquired a
stake of 45% in the US wind power developer TradeWind Energy LLC (TradeWind),
which is based in Lenexa, Kansas, with which it has formed a strategic alliance for the
joint development of wind projects in the Midwest and other areas of the United States.
Enel paid $10.5 million for its holding, equal to about €8 million at the acquisition date.
Under the terms of the agreements, Enel North America will cooperate with TradeWind
on the co-development of TradeWind’s pipeline of more than 1,000 MW of projects,
supplying the turbines for the projects. Enel will have the right to acquire and operate
the wind plants developed.
25
Memorandum of Understanding with NEK (Bulgarian national electricity
company) and Bulgargaz
On October 4, 2006, Enel and NEK (the Bulgarian national electricity company) signed
a Memorandum of Understanding to conduct a preliminary technical and financial
feasibility study to increase generating capacity at the Maritza East III power plant by
640 MW and the subsequent joint implementation of the project.
Enel estimates the investment required to complete the project at about €900 million,
with the introduction of the most advanced environmental impact abatement
technologies while maximizing synergies with the existing plant.
On the same date, Enel also signed a Memorandum of Understanding with Bulgargaz
for the joint construction of a gas pipeline between Bulgaria and Italy along “Corridor 8”,
through Macedonia and Albania. The corridor is of strategic importance for these
countries, which in April 2005 signed a joint statement of cooperation in the energy
infrastructure field.
Acquisition of an additional 25% of Enelco

Following the agreement signed on October 4, 2006, Enel completed the acquisition of
an additional 25% of the Greek electricity company Enelco, raising its equity investment
in the company to 75%. The other 25% remains under the control of Prometheus Gas, a
joint venture between the Copelouzos Group (Greece) and Gazprom (Russia). Enelco
already holds two generation licenses for the development of gas combined-cycle plants
at Viotia and Evros and will participate in all tenders for the development of independent
generation plants in Greece, beginning with that for the development of 400 MW in new
capacity recently announced by the Greek authorities.
Enel, in cooperation with Prometheus Gas, intends to be a major player in the Greek
market, where liberalization is under way, and will also have the opportunity to export
energy to Italy over existing interconnection infrastructure.
Acquisition of generation capacity in Brazil

Following through on the agreement signed on June 9, 2006, on October 6, 2006 Enel,
through the Brazilian subsidiary of Enel Latin America, Enel Brasil Partecipações,
closed the acquisition of the entire share capital of 10 companies in the Rede Group
that possess 20 mini-hydro plants with a total installed capacity of about 92 MW.
The price for the acquisition of the 10 companies was about 464 million reals, equal to
about €168 million at the exchange rate on the acquisition date.
The transaction also envisages the acquisition of another company operating two mini-
hydro plants with an installed capacity of about 6 MW. This acquisition should be
completed by the end of the 1st Half of 2007, as soon as the revamping work currently
under way is completed.
26
Acquisition of a wind project in Texas
On October 18, 2006, Enel, through its subsidiary Enel North America, signed an
agreement with Windkraft Nord USA (Wkn USA) to acquire concession rights to 63 MW
of the Snyder project, to be developed in Scurry County in Texas. The new wind plant
will generate CO2-free power in Texas as from 2007.
Agreement with Sonatrach for the supply of 2 billion cubic meters of gas per year
On November 15, 2006, Enel signed an agreement with Sonatrach for the supply of
natural gas through the GALSI gas pipeline now under construction. The agreement
will enable Enel to import 2 billion cubic meters of gas a year for 15 years as from the
entry into service of the gas pipeline, which is expected to be completed by the end of
2011. The GALSI project, in which Enel has a stake of 13.5%, involves the construction
of a gas pipeline about 900 kilometers long with an initial annual capacity of 8 billion
cubic meters. The pipeline will link Italy with Algeria via Sardinia, with an investment of
about €2 billion.
Partnership in Turkey
On December 4, 2006 Enel signed a partnership agreement with Enka, Turkey’s
leading construction company, which is active in infrastructure (motorways, airports,
gas and oil pipelines), as well as real estate and power stations. The partnership
agreement envisages the development and execution of power generation, distribution
and sale projects in Turkey. In the first stage of the partnership, Enel and Enka will
participate together in the privatization of distribution companies undertaken by the
Turkish government, submitting a joint binding offer for the acquisition of the entire
share capital of the first three distribution companies to be privatized (Ayedas, Basken
and Sedas), which together supply electricity to 6 million customers and account for
about 21% of the Turkish market. The deadline for submitting offers was initially set for
January 19, 2007 but has been postponed until the end of 2007.
Acquisition of 195 wind generators

On December 19, 2006 Enel has signed a contract with the Spanish company Gamesa
for the purchase of 195 wind generators for an estimated €138 million. The generators,
which have a total capacity of 166 MW, will be installed in a number of wind plants in
Italy between 2007 and 2009. Once on-line, they will avoid CO2 emissions of 0.2 million
metric tons a year.
The transaction is part of the plan to invest more than €4 billion to make Enel the
world’s most advanced energy company in the search for innovative solutions to
reducing the environmental impact of power generation and distribution.
27
Regulatory and rate developments
The “Bersani” bill

On June 9, 2006 the Council of Ministers approved the text of a bill containing
measures for the completion of the liberalization of the electricity and gas market and
to boost energy savings and the use of renewable energy resources. The main
measures include:
the establishment by the Authority for Electricity and Gas of public service
obligations, notably standard service delivery conditions, to safeguard households
and small enterprises;
rules governing financial derivatives connected with the physical electricity and gas
markets;
stronger rules governing unbundling, with the corporate separation of electricity
transport, gas transport and gas storage operations from the production, supply and
sale of electricity and gas;
a revision of antitrust ceilings for gas imports;
the definition of criteria for assessing offers for the distribution of gas;
an increase in energy efficiency targets for distributors;
incentives for the construction of new gas pipelines and regasification terminals for
local authorities that host energy infrastructure;
the extension of the powers of the Authority for Electricity and Gas to all activities in
the electricity and gas industry and the strengthening of its powers regarding the
promotion of competition.
The bill was presented in the Senate to start its passage through Parliament.
General costs of the electricity system

With joint decrees dated August 6, 2004 and June 22, 2005, the Ministry for Economic
Development and the Ministry for the Economy and Finance set the amount of
electricity generation costs that cannot be recovered through rates and the extra costs
connected to the natural imported gas from Nigeria (stranded costs) and the related
terms of reimbursement. The June 22, 2005 decree spread payments over a period
ending in 2009 and defined payments through June 2006, leaving it to the Authority for
Electricity and Gas to set the terms for subsequent payments.
With Resolution no. 132/06 of June 28, 2006, the Authority increased the rate
component for covering stranded costs, raising it to an average of about €2.7/MWh, in
order to speed up the reimbursement of costs recognized and to reduce interest owed
for late payment. Resolution no. 132/06 also provided for the disbursement of a total of
€510 million to Enel, which took place in July, and established that the Electricity
28
Equalization Fund shall fully reimburse stranded cost items (referred to in annexes A, B
and C of the decree of August 6, 2004) by December 31, 2009.
With Resolution no. 207/06 of September 29, 2006, the Authority for Electricity and
Gas confirmed for the 4th Quarter of 2006 the value of the rate component covering
stranded costs, established with Resolution no. 132/06. The resolution also provided
for another disbursement to Enel by the Electricity Equalization Fund of €46 million,
which was made on October 16.
In addition, on December 29, 2006, the Electricity Equalization Fund, in line with the
provisions of Resolution no. 132/06, provided for the payment of a further €189 million
to Enel (of which €154 million regarding the costs for Nigerian gas for 2005, referred to
in annex C of the decree of August 6, 2004, and €35 million referred to in annexes A
and B of that decree). At December 31, 2006, Enel had received a total of €1,230
million and had an accrued receivable of €310 million. Compared with the amounts
established by the Authority, Enel also has a residual right of €448 million for the period
2007-2009.
Long-term electricity import contracts

Enel has two contracts for the import of electricity, one with EdF (on the French border,
terminating on December 31, 2007) and the other with Atel (on the Swiss border,
terminating December 31, 2011). The power imported under these contracts is sold to
the Single Buyer at a set price and is used to supply the regulated market.
In December 2005, Italian and French authorities adopted a number of measures
regarding the management of these long-term contracts. Specifically:
with a decree dated December 13, 2005, the Ministry for Productive Activities (now
the Ministry for Economic Development) set the sale price for 2006 for electricity
imported under those contracts at €66/MWh;
with its decision of December 1, 2005, the French regulator (CRE) established that
it would not reserve any import capacity for the performance of the contract
between Enel and EdF, thereby modifying previous practice, which had envisaged
the allocation of 50% of the interconnection capacity required to perform long-term
contracts to the Italian ISO and 50% to foreign ISOs. Enel has appealed the
decision to the French Administrative Court. Pending a decision on the appeal, Enel
sold part of the electricity under the contract abroad;
the Government and the regulator continued to reserve the Italian share of the
import capacity under those contracts for 2006.
29
For 2007, with a decree of December 15, 2006, the Minister for Economic
Development decided:
to maintain the sale price to the Single Buyer set in 2006, equal to €66/MWh, also
providing for the possible indexing of that value to wholesale electricity prices in
Italy using a mechanism to be established in accordance with criteria defined by the
Authority;
to not maintain the import capacity reserve for the long-term contract with EdF.
Accordingly, in 2007 the electricity under the contract will mainly be sold by Enel in
foreign markets;
to maintain retained the capacity reserve on the Swiss border with regard to the
contract with Atel, with the joint agreement of Italian and Swiss authorities.
30
Overview of the Group’s performance and financial position
Summary of results
Domestic electricity generation and demand
Domestic electricity flows
Millions of kWh
2006 2005 2006-2005
Gross electricity generation:

- thermal 263,252 253,072 10,180 4.0%
- hydroelectric 43,022 42,929 93 0.2%
- geothermal and other resources 8,742 7,671 1,071 14.0%
Total gross electricity generation 315,016 303,672 11,344 3.7%
Auxiliary services consumption (13,290) (13,064) (226) -1.7%
Net electricity generation 301,726 290,608 11,118 3.8%
Net electricity imports 44,718 49,155 (4,437) -9.0%
Electricity delivered to the network 346,444 339,763 6,681 2.0%
Consumption for pumping (8,648) (9,319) 671 7.2%
Electricity demand 337,796 330,444 7,352 2.2%
Source: Terna - Rete Elettrica Nazionale (monthly report – December 2006).
Domestic electricity demand increased by 2.2% over 2005 to reach 337.8 billion
kWh. Of this total, 86.8% was met by net domestic electricity generation for
consumption (85.1% in 2005), with the remaining 13.2% being met by net electricity
imports (14.9% in 2005);
net electricity imports for 2006 decreased by 4.4 billion kWh, essentially owing to
the sharp rise in electricity prices in Europe in early 2006;
as a result of lower imports and an increase in demand for electricity, gross electricity
generation increased by 3.7%, due primarily to a sharp increase in thermal
generation (up 10.2 billion kWh). This development was accompanied by growth in
generation from geothermal and other sources (up 1.1 billion kWh) related primarily
to the increase in wind generation of 0.9 billion kWh.
31
Enel generation and sales (domestic)
Millions of kWh
2006 2005 2006-2005
Net electricity generation 103,910 112,087 (8,177) -7.3%

Electricity purchases 160,090 173,683 (13,593) -7.8%
(1)
Sales to wholesalers 99,695 114,811 (15,116) -13.2%
(2)
Sales on the regulated market 120,385 129,677 (9,292) -7.2%
(2)
Sales on the free market 22,267 18,484 3,783 20.5%
(3)
Electricity transported on Enel’s distribution network 255,038 251,045 3,993 1.6%
(1) Sales made by generation companies and sales to resellers.
(3) Including 1,472 million kWh of electricity wheeled in previous periods but commercially recognized in 2005.
Enel’s net domestic electricity generation fell by 7.3% in 2006. This decrease in
production is primarily related to thermal power generation;
electricity purchases fell by 7.8% in 2006. This decrease is related to lower imports
and smaller sales on the regulated market;
sales to wholesalers fell by 13.2% from the previous year. The decrease is
substantially attributable to the decrease in volumes sold on the Power Exchange
and to the Single Buyer, partially offset by an increase in sales to resellers.
As for overall sales to the final consumer, Enel’s market share for 2006 came to 45.1%
(about 47.8% for 2005). In particular:
sales on the regulated market fell by 7.2% for 2006, primarily the result of market
liberalization, which, however, gave rise to an increase of 20.5% in sales on the free
market;
electricity transported on Enel’s distribution network for 2006 increased by 1.6%.
Excluding from the 2005 figures the additions made during the periods in question for
electricity that was physically transported in previous periods but commercially
recognized in 2005 (some 1.5 billion kWh), this rise came to about 2.2%.
Enel generation and sales (abroad)
Millions of kWh
2006 2005 2006-2005
Net electricity generation 27,516 13,625 13,891 102.0%

(1)
Electricity sold to end-users 17,153 8,093 9,060 111.9%
Electricity transported on Enel’s distribution network 12,570 9,651 2,919 30.2%
32
Enel’s net electricity generation abroad for 2006 came to 27.5 billion kWh, an
increase of 13.9 billion kWh (of which 10.7 billion kWh from nuclear plants and 3.1
billion kWh from hydro facilities), mainly attributable to acquisitions carried out
during 2006;
electricity sales in 2006 increased by 9.1 billion kWh thanks to the contribution of
the Romanian distribution companies, which have been consolidated since the end
of April 2005, and the Russian energy trading company RusEnergoSbyt, which has
been consolidated since June 2006;
energy transported in 2006 came to 12.6 billion kWh, an increase of 2.9 billion kWh,
mainly due to the different period of consolidation of the Romanian companies in
the two years in question.
Analysis of Group performance
Main changes in the scope of consolidation

The scope of consolidation changed with respect to 2005 as a result of the following
main transactions:
the acquisition of controlling stakes in Electrica Banat and Electrica Dobrogea (now
Enel Electrica Banat and Enel Electrica Dobrogea), companies active in the
distribution and sale of electricity in Romania, on April 28, 2005. Accordingly, the
income statement figures for 2005 reflect the consolidation of the companies for
eight months only;
sale of 100% of Wind, 62.75% of which was sold on August 11, 2005, and 6.28%
on February 8, 2006, with the remaining 30.97% being transferred to Weather
Investments, again on February 8, in exchange for a 20.9% stake in the latter;
sale of 43.85% of Terna, which took place in two transactions (13.86% on April 5,
2005 and 29.99% on September 15, 2005), and its deconsolidation on September
15, 2005;
sale of 30% of Enel Unión Fenosa Renovables on May 30, 2006. Following this
sale, the interest in the company fell to 50%, with the Group exercising joint control
over the company together with the other shareholders. As a result, the company is
being consolidated on a proportionate basis as of that date;
acquisition of a 66% interest in Slovenské elektrárne, a company that generates
and sells electricity in Slovakia, on April 28, 2006;
acquisition from third parties of the remaining 40% interest in Maritza East III Power
Holding on June 14, 2006. Following this transaction, the Group now holds a 73%
stake in Enel Maritza East 3 (formerly Maritza East III Power Company), a
Bulgarian generation company;
33
acquisition, on June 14, 2006, of a 100% interest in Maritza O&M Holding
Netherlands, a holding company that owns 73% of Enel Operations Bulgaria
(formerly Maritza East 3 Operating Company), which is responsible for the
maintenance of the Maritza East III plant;
acquisition, on June 21, 2006, of a 49.5% interest in Res Holdings, which holds a
100% stake in the Russian firm RusEnergoSbyt (energy trading and sales). Enel
now exercises joint control over the company together with the other shareholders;
as a result, the company is consolidated on a proportionate basis;
acquisition, on July 13, 2006, of a 100% stake in Erelis, a company that develops wind
farms in France;
acquisition, on August 1, 2006, of a 100% stake in Hydro Quebec Latin America (now
Enel Panama), which, together with Globeleq (a private equity fund), exercises de
facto joint control over Fortuna, a Panamanian hydro generation company. As a
result, Fortuna is consolidated on a proportionate basis;
acquisition, on October 6, 2006, through Enel Brasil Partecipações, a subsidiary of
Enel Latin America, of 100% of 10 companies of the Rede Group that own 20 mini-
hydro plants.
Excluding the sales of Wind and Terna (the results and related capital gains of which
were recognized in 2005 as discontinued operations), the balance sheet effects of the
other consolidation changes do not affect the comparability of the figures for the two
years. The main effects are shown in the comments on results by Division.
It should also be noted that the changes made to the classification of certain transactions
recognized in the income statement in 2006, essentially related to the management of
commodity risk, resulted in related reclassifications of the comparative figures for previous
periods.
Definition of performance indicators

In order to present the results of the Group and analyze its financial structure, Enel has
prepared separate reclassified schedules that differ from those envisaged under the
IFRS-EU adopted by the Group and presented in the consolidated report. These
reclassified schedules contain different performance indicators from those obtained
directly from the consolidated financial statements, which management feels are useful
in monitoring Group performance and representative of the financial performance of the
Group’s business.
In accordance with recommendation CESR/05-178b published on November 3, 2005,
the criteria used to calculate these indicators are described below:
34
Gross operating margin: an operating performance indicator, calculated as the
“Operating income” before “Depreciation, amortization and impairment losses” and
“Income from equity exchange transaction”.
Net non-current assets: calculated as the difference between “Non-current assets” and
“Non-current liabilities” with the exception of:
“Deferred tax assets”;
“Financial receivables due from financing entities”, “Other securities” and other
minor items reported under “Non-current financial assets”;
“Long-term loans”;
“Post-employment and other employee benefits”;
“Provisions for risks and charges”;
“Deferred tax liabilities”.
Net current assets: calculated as the difference between “Current assets” and “Current
liabilities” with the exception of:
“Receivables for factoring advances”, “Other securities” and other minor items
reported under “Current financial assets”;
“Cash and cash equivalents”;
“Short-term loans” and the “Current portion of long-term loans”.
Net capital employed: calculated as the algebraic sum of “Net non-current assets” and
“Net working capital”, provisions not previously considered, deferred tax liabilities and
deferred tax assets.
Net financial debt: a financial structure indicator, determined by “Long-term loans”, the
current portion of such loans and “Short-term loans” less “Cash and cash equivalents”,
“Current financial assets” and “Non-current financial assets” not previously considered
in other balance sheet indicators.
35
Group performance
Millions of euro
2006 2005 2006-2005
Total revenues 38,513 33,787 4,726 14.0%
Total costs 29,880 26,314 3,566 13.6%
Net income/(charges) from commodity risk management (614) 272 (886) -
GROSS OPERATING MARGIN 8,019 7,745 274 3.5%
Income from equity exchange transaction 263 - 263 -
Depreciation, amortization and impairment losses 2,463 2,207 256 11.6%
OPERATING INCOME 5,819 5,538 281 5.1%
Financial income 513 230 283 123.0%

Financial expense 1,160 944 216 22.9%
Net financial income/(expense) (647) (714) 67 -9.4%
Income/(expense) from equity investments accounted for using

the equity method (4) (30) 26 -86.7%
INCOME BEFORE TAXES 5,168 4,794 374 7.8%
Income taxes 2,067 1,934 133 6.9%
INCOME FROM CONTINUING OPERATIONS 3,101 2,860 241 8.4%

INCOME FROM DISCONTINUED OPERATIONS - 1,272 (1,272) -
NET INCOME (Group and minority interests) 3,101 4,132 (1,031) -25.0%
Minority interests (65) (237) 172 -72.6%
GROUP NET INCOME 3,036 3,895 (859) -22.1%
36
Revenues
Millions of euro
2006 2005 2006-2005
Electricity sales and transport and Electricity Equalization Fund contributions 34,231 29,008 5,223
Gas sold and transported to end-users 1,695 1,556 139
Capital gains on disposal of assets 90 131 (41)
Other services, sales and revenues 2,497 3,092 (595)
Total 38,513 33,787 4,726
In 2006, revenues from electricity sales and transport and Electricity Equalization
Fund contributions amounted to €34,231 million, up €5,223 million (up 18.0%) over
2005. This increase is connected primarily with the following factors:
a €2,345 million increase in revenues from foreign operations, €940 million of which
related to the consolidation at the end of April 2006 of Slovenské elektrárne, €195
million to the consolidation of RusEnergoSbyt acquired in June 2006, €18 million to
the acquisition of Enel Panama on August 1, 2006, and €1,022 million related to
international energy trading;
growth of €1,101 million in revenues from the transport and sale of electricity in the
domestic free market, essentially due to the increase in unit prices and volumes
sold;
an increase of €823 million in revenues from sales and transport on the domestic
regulated market, essentially related to the coverage of generation costs reflected
in rates, partially offset by lower volumes sold;
an increase of €719 million in wholesale sales due to an increase in volumes sold
to resellers;
an increase of €396 million in revenues due to an increase in remuneration of
ancillary services;
lower contributions from the Electricity Equalization Fund related to the recognition
in 2005 of a €100 million gain connected with the recovery of charges for green
certificates incurred in 2002 and 2003.
Revenues from gas sold and transported to end-users increased by €139 million (up
8.9%) due to the increase in the rate component connected with trends in the cost of
gas, which more than offset the decline in volumes sold.
Capital gains on disposal of assets amounted to €90 million, nearly all of which
related to the gain realized on the sale of power distribution and sale networks in 18
municipalities in the Province of Modena (€85 million). Gains recognized in 2005 (€131
37
million) mainly regarded the sale of distribution networks in the municipalities of Trento,
Ortona and San Vito Chetino and the sale of 49% of Leasys.
Other services, sales and revenues came to €2,497 million for 2006 (€3,092
million for 2005), a decline of €595 million from the previous year. This reduction
is largely connected with the following factors:
gains recognized in 2005 in the amount of €338 million related to previous years’
regulatory items connected with reserve services provided to the ISO (now the
Electricity Services Operator);
a €152 million decline in 2006 in revenues for contract work in progress due mainly
to the reduction in engineering and construction for third parties, both domestically
and abroad, which was limited to the completion of work in progress;
a decrease of €39 million in connection and activation fees for electricity services;
a fall of €33 million in revenues from the sale of fuel for trading, which was the
combined effect of a €81 million decline in sales of fuels other than natural gas,
partially offset by a €48 million increase in gas sales;
the recognition in 2006 of income totaling €194 million related to the service
continuity bonus payable to Enel Distribuzione and Deval for improvements in
service continuity achieved, including a supplement to the amount recognized
during the previous year for continuity improvements achieved in 2005. The
corresponding income recognized in the previous year totaled €115 million.
38
Costs
Millions of euro
2006 2005 2006-2005
Electricity purchases 17,082 14,321 2,761

Consumption of fuel for electricity generation 4,086 3,910 176
Fuel for trading and natural gas for resale to end-users 1,628 1,604 24
Materials 750 798 (48)
Personnel 3,210 2,762 448
Services, leases and rentals 3,400 3,057 343
Charges for CO2 emissions 84 228 (144)
Other operating costs 629 683 (54)
Capitalized expenses (989) (1,049) 60
Total 29,880 26,314 3,566
Electricity purchases increased in 2006 by €2,761 million (up 19.3%), due essentially
to the change in the scope of consolidation of foreign companies and an increase in the
average cost of electricity, which was partially offset by a reduction in quantities
purchased in Italy. The latter development was essentially due to a decrease in
volumes sold on the regulated market.
Costs for the consumption of fuel for electricity generation in 2006 came to €4,086
million, up €176 million over the previous year (up 4.5%) due primarily to the
consolidation of Slovenské elektrárne (€121 million) and an increase in the unit cost of
fuels, which more than offset the effects of a contraction in thermal electricity
generation.
Purchases of fuel for trading and natural gas for resale to end-users increased by
€24 million (up 1.5%) over the previous year, which was essentially due to the
increase in the purchase price of natural gas for resale to end-users, which was
partially offset by a decline in the purchase of fuel for trading (including natural gas).
Costs for materials came to €750 million in 2006, down €48 million or 6.0%
compared with the previous year. The decrease in materials used by the Domestic
Infrastructure and Networks Division as a result of the gradual completion of the
digital metering project was almost entirely offset by growth for the International
Division.
Personnel costs for 2006 totaled €3,210 million, an increase of €448 million (up
16.2%) and include the total charge recognized in the year for early retirement
incentives (€487 million). Excluding the effect of changes in the scope of consolidation
39
related largely to foreign operations, as well as the increase in costs for early
retirement incentives, personnel costs, including the charge related to the renewal of
the collective bargaining agreement for the electricity industry, fell by €73 million (down
2.7%) in 2006, with an average reduction in the workforce of 4.8%.
Costs for services, leases and rentals totaled €3,400 million in 2006, up €343 million
(up 11.2%) over 2005. This change is essentially due to the increase in transport costs
(up €280 million) and the effect of the change in the scope of consolidation of the
foreign subsidiaries (up €80 million).
Charges for CO2 emissions in 2006 came to €84 million, down €144 million or 63.2%
from the previous year. The decrease is associated with the alignment of the value of
the allowance deficit for 2005 (10.7 million metric tons) with the prices of the
allowances acquired in 2006, which were significantly lower than the market prices
used for measurement at December 31, 2005. This positive effect was partially offset
by the cost incurred to acquire part of the allowances to cover the deficit for the year
and the measurement at year-end prices of the deficit not yet covered (1.3 million
metric tons).
Other operating costs for 2006 came to €629 million, down €54 million (down 7.9%)
from the previous year, due primarily to a decrease in provisions for risks and charges
(down €114 million), which was partially offset by higher charges related to the
consolidation of Slovenské elektrárne (up €50 million).
In 2006, capitalized expenses fell by €60 million (down 5.7%), due primarily to the
reduction in internal plant construction work by the Domestic Generation and Energy
Management Division.
Net income/(charges) from commodity risk management showed a net charge of

€614 million for 2006, compared with net income of €272 million the previous year. This
development is due primarily to greater net charges on contracts for differences with
the Single Buyer. In particular, net charges in 2006 include €485 million in respect of
the results of positions closed during the year (€233 million in income in 2005) and
€129 million for the fair value measurement of outstanding derivative contracts as of
the end of the period (€39 million of net income in 2005). The net charge in respect of
closed positions was affected by increases in energy prices in the pool, which also
resulted in an increase in revenues from electricity sales on the Power Exchange.
However, this rise was more than offset by the decline in revenues as a result of a
reduction in volumes sold.
40
Income from the equity exchange transaction is related to the measurement of the
effects of the exchange of 30.97% of Wind for 20.9% of Weather, which led to the
recognition of income of €263 million.
Depreciation, amortization and impairment losses increased by €256 million (up

11.6%) over the previous year, due essentially to an increase in depreciation and
amortization for the International Division, which was primarily related to the
consolidation of Slovenské elektrárne.
Operating income for 2006 came to €5,819 million, an increase of €281 million (up
5.1%) over the previous year. Excluding the income generated by the Wind-Weather
equity exchange in the amount of €263 million, operating income reached €5,556
million, an increase of €18 million over the previous year.
Other factors that contributed to the change in operating income are outlined in the
analysis of results by Division.
Net financial expense for 2006 decreased by a total of €67 million or 9.4%. The
decline was essentially attributable to a reduction in the variable interest rate
component and a lengthening of the average maturity of debt against a background of
rising market rates, as well as the recognition of the right to reimbursement of
registration fees paid on bonds issued between 1976 and 1984. These benefits were
partially offset by an increase in net financial expenses connected with the
consolidation of Slovenské elektrárne.
The result of investments accounted for using the equity method came to a
negative €4 million in 2006, improving by €26 million over the previous year. The
net charges for 2005 had included €37 million in respect of the equity method
measurement of the investment in Wind Telecomunicazioni.
Income taxes came to €2,067 in 2006, representing an effective tax rate of 40.0%,
compared with 40.3% in 2005.
41
Analysis of the Group’s financial position
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Net non-current assets:

- property, plant and equipment and intangible assets 35,557 30,795 4,762
- goodwill 2,271 1,575 696
- equity investments accounted for using the equity method 56 1,797 (1,741)
- other net non-current assets/(liabilities) (187) 643 (830)
Total 37,697 34,810 2,887
Net current assets:

- trade receivables 7,958 8,316 (358)
- inventories 1,209 884 325
- net receivables from the Electricity Equalization Fund 407 410 (3)
- other net current assets/(liabilities) (2,634) (1,466) (1,168)
- trade payables (6,188) (6,610) 422
Total 752 1,534 (782)
Gross capital employed 38,449 36,344 2,105
Provisions:
- post-employment and other employee benefits (2,633) (2,662) 29
- provisions for risks and charges and net deferred taxes (5,101) (1,954) (3,147)
Total (7,734) (4,616) (3,118)
Net capital employed 30,715 31,728 (1,013)
Total shareholders’ equity 19,025 19,416 (391)

Net financial debt 11,690 12,312 (622)
Property, plant and equipment and intangible assets increased by a total of €4,762
million, due essentially to the change in the scope of consolidation resulting from the
acquisition of a 66% stake in Slovenské elektrárne (€3,886 million), Enel Panama
(€159 million), the ten Rede Group companies (€150 million), and investments for the
period in the amount of €2,963 million, net of depreciation, amortization and impairment
losses totaling €2,350 million.
Goodwill, in the amount of €2,271 million, increased by €696 million due primarily to the
recognition in 2006 of goodwill related to the acquisitions of Slovenské elektrárne (€609
million), RusEnergoSbyt (€79 million) through the acquisition of a 49.5% stake in its
direct parent Res Holdings, Enel Panama (€60 million), and Erelis (€14 million), net of
the elimination of goodwill related to the sale of 30% of Enel Unión Fenosa Renovables
(a decrease of €49 million). It should also be noted that the above figures for the
acquisitions completed during the year, with the exception of those for Slovenské
elektrárne, have been allocated provisionally to goodwill while waiting to complete the
42
analysis needed to allocate the amounts more accurately to the assets and/or liabilities
acquired.
Equity investments accounted for using the equity method, in the amount of €56
million, fell by €1,741 million from the previous year. The figure at December 31, 2005
included €1,728 million in respect of the investment in Wind (37.25%), part of which,
following the transaction of February 8, 2006, was sold outright (6.28% for €328 million
in cash) and part transferred (30.97%) in exchange for 20.9% of Weather.
Other net non-current assets/(liabilities) showed a net liability of €187 million at
December 31, 2006, compared with net assets of €643 million at December 31, 2005.
This change is due primarily to the following factors:
a €638 million decrease in the receivable from the Electricity Equalization Fund,
related to the collection of receivables for the reimbursement of stranded costs, as
established by the Authority in its Resolution no. 132/06 of June 28, 2006;
the reclassification in 2006 of the 5.2% investment in Weather, in the amount of
€286 million, to equity investments accounted for using the equity method (it had
been recognized among non-current financial assets at December 31, 2005); on
December 21, 2006, the entire investment was sold for €1,962 million;
release of the deposit for the purchase of 66% of Slovenské elektrárne (€168
million), which was recognized among non-current financial assets at the end of
2005;
recognition of financial receivables from the State Decommissioning Fund in the
amount of €269 million related to the consolidation of Slovenské elektrárne.
Net current assets came to €752 million, a decrease of €782 million over the previous
year. The majority of this change is due to the following:
a €358 million reduction in trade receivables due primarily to a reduction in
receivables for the sale of electricity on the Power Exchange, net of the effect of the
consolidation of Slovenské elektrárne and an increase in receivables for gas sales
to end-users;
a €325 million increase in inventories, the majority of which related to the change in
the scope of consolidation with the acquisition of Slovenské elektrárne, as well as
to an increase in fuel inventories;
a €1,168 million reduction in other net current assets/(liabilities) related to following
main factors:
- a decrease in net income tax receivables as a result of the recognition of
current taxes for the year in the amount of €1,652 million net of advances in the
amount of €933 million;
- the recognition of net financial liabilities related to the consolidation of
Slovenské elektrárne equal to €488 million;
43
a €422 million decrease in trade payables, related essentially to the contraction in
engineering and construction activities and changes in the temporal distribution of
investment activities.
Provisions came to €7,734 million, an increase of €3,118 million from the previous
year. In particular, provisions for risks and charges increased by €2,885 million due
primarily to the consolidation of Slovenské elektrárne (an increase of €2,884 million)
related essentially to the decommissioning of nuclear plants.
Net capital employed came to €30,715 million at December 31, 2006, and was funded
by shareholders’ equity attributable to the Group and minority interests in the amount of
€19,025 million and net financial debt of €11,690 million. With regard to the latter
figure, the debt-to-equity ratio at December 31, 2006 came to 0.61 (compared with 0.63
at December 31, 2005).
44
Analysis of the financial structure
Net financial debt

Net financial debt and changes in the period are detailed in the table below:
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Long-term debt:
- bank loans 3,677 2,782 895
- bonds 8,375 8,043 332
- other loans 142 142 -
Long-term debt 12,194 10,967 1,227
Long-term financial receivables (1,090) (63) (1,027)
Net long-term debt 11,104 10,904 200
Short-term debt:
Bank loans:
- short-term portion of long-term debt 233 399 (166)
- other short-term bank debt 542 970 (428)
Short-term bank debt 775 1,369 (594)
Bonds (short-term portion) 59 487 (428)

Other loans (short-term portion) 31 49 (18)
Commercial paper 531 275 256
Other short-term financial payables 13 116 (103)
Other short-term debt 634 927 (293)
Long-term financial receivables (short-term portion) (30) (3) (27)

Factoring receivables (211) (374) 163
Other short-term financial receivables due from associates (10) (3) (7)
Cash and cash equivalents (572) (508) (64)
Cash and cash equivalents and short-term financial receivables (823) (888) 65
Net short-term financial debt 586 1,408 (822)
NET FINANCIAL DEBT 11,690 12,312 (622)
Net financial debt came to €11,690 million at December 31, 2006, down €622 million
from the previous year. The decline is essentially the net result of the sale of the 26.1%
holding in Weather for €1,962 million (of which €1,000 million was received in
December 2006, with the remaining €962 million deferred over an 18-month period)
and the acquisition of the 66% stake in Slovenské elektrárne and the consolidation of
its debt.
Specifically, net long-term financial debt increased by €200 million as the net result of
the increase in gross long-term debt in the amount of €1,227 million and the increase in
45
long-term financial receivables of €1,027 million, of which €962 million in respect of the
payment deferral granted in the sale of Weather.
Net short-term financial debt, equal to €586 million at the end of 2006, decreased by
€822 million from the previous year, €594 million of which related to short-term bank
debt, €293 million to other short-term loans, and €65 million to the net decrease in cash
and cash equivalents and short-term financial receivables.
Cash flows
Millions of euro
2006 2005 2006-2005
Cash and cash equivalents at the start of the year 508 363 145
- of which discontinued operations 133 (133)
Cash flows from operating activities 6,756 5,693 1,063

- of which discontinued operations 730 (730)
Cash flows from investing/disinvesting activities (2,374) 1,092 (3,466)

- of which discontinued operations (439) 439
Cash flows from financing activities (4,322) (6,654) 2,332

- of which discontinued operations (11) 11
Effect of exchange rate changes on cash and cash equivalents 4 14 (10)
(1)
Cash and cash equivalents at the end of the year 572 508 64
- of which discontinued operations (2) - -
(1) Of which short-term securities equal to €25 million at December 31, 2006.
(2) Cash and cash equivalents in respect of discontinued operations at the time of their disposal, equal to €413 million, were deducted
from the gain on disposal included in the cash flow from disinvesting activities.
Cash flows from operating activities were positive at €6,756 million in 2006, compared
with €5,693 million the previous year. Excluding the cash flow effects of Terna and
Wind for 2005 (€730 million), cash flows from operating activities improved by €1,793
million, which was generated by an improvement in the gross operating margin (up
€274 million) and lower cash requirements connected with the change in net current
assets for the two years in question. The variation is mainly due to a decrease of €795
million in tax payments and an increase of €510 million in collections on receivables for
the reimbursement of stranded costs provided for in the Authority’s Resolution no.
132/06 of June 28, 2006.
Cash flows from investing/disinvesting activities for 2006 resulted in a use of funds of
€2,374 million, compared with the generation of €1,092 million the previous year.
In particular, investments in property, plant and equipment and intangible assets
amounted to €2,963 million, a fall of €294 million due primarily to the deconsolidation of
46
Terna and Wind, partly offset by the consolidation of Slovenské elektrárne, increased
investment in works for the transformation of thermal plants and plant upgrading and
repowering to enhance safety and environmental performance.
Investments in entities and business units, net of cash and cash equivalents acquired,
totaled €1,082 million, mainly including €676 million related to the purchase of a 66%
stake in Slovenské elektrárne (Enel had already made a deposit of €168 million in
2005), €169 million for the acquisition of ten Rede Group companies by Enel Brasil
Partecipações, €119 million for the acquisition of Enel Panama, and €84 million for the
acquisition of a 49.5% stake in Res Holdings (a Dutch firm that, in turn, holds 100% of
RusEnergoSbyt). Investments in entities and business units in 2005 had included the
acquisition of 5.2% of Weather for €305 million.
The disposal of entities and business units, net of cash and cash equivalents sold,
generated a cash flow of €1,518 million, related essentially to cash flow from the
payment of the first installment of the price for the 26.1% holding in Weather in the
amount of €1,000 million, the sale on February 8, 2006, to a subsidiary of Weather, of a
6.28% stake in Wind for €328 million, as well as to the sale of the distribution and sale
network of a number of municipalities in the Province of Modena for €108 million and
the transfer of a 30% stake in Enel Unión Fenosa Renovables for €72 million. Cash
flows from divestments in 2005 were essentially related to the sale of 62.75% of Wind
for €2,938 million (net of €48 million in cash and cash equivalents sold) and the sale of
the investment in Terna at a total price of €1,518 million (net of €365 million in cash
and cash equivalents sold).
Cash requirements for investing and financing activities, the latter connected with the
distribution of €3,959 million in dividends, as well as the reduction of financial debt in
the amount of €471 million, were financed through the cash flow from operating
activities, amounting to €6,756 million, and the increase in share capital and reserves
due to the exercise of stock options in the amount of €108 million. The surplus
increased cash and cash equivalents by €64 million (including €4 million as the effect
of exchange rate changes).
47
Results by Division
The results presented in this report take account of the new organizational structure
launched at the end of 2005 and operational since January 1, 2006, which, in addition
to the Domestic Sales Division, the Domestic Generation and Energy Management
Division and the Domestic Infrastructure and Networks Division, saw the creation of an
International Division that includes all the Group’s resources devoted to generation and
distribution activities abroad.
For the purposes of providing comparable figures, the data for 2005 shown in the
following tables have been reallocated to the Divisions on the basis of the new
organizational arrangements. The figures for transmission networks and
telecommunications operations following the deconsolidation of Wind and Terna in the
2nd Half of 2005 are reported as discontinued operations.
Following the transfer of the “large electricity users” unit (customers with annual
consumption of more than 100 million kWh) from Enel Trade to Enel Energia, the 2005
figures for the unit were reallocated from the Domestic Generation and Energy
Management Division to the Domestic Sales Division for comparative purposes.
48
Results by Division for 2006 and 2005
Results for 2006 (1)
Continuing operations
Domestic Domestic
Generat. Infrastruc. Services Eliminations
Domestic and Energy and Parent and Other and
Millions of euro Sales Managem. Networks Internat. Company Activities adjustments Total TOTAL
Revenues from third parties 20,981 12,694 906 3,056 891 267 (282) 38,513 38,513
Revenues from other
segments 127 2,967 4,801 12 287 894 (9,088) - -
Total revenues 21,108 15,661 5,707 3,068 1,178 1,161 (9,370) 38,513 38,513
Net income/(charges) from
commodity risk management 4 (705) - 91 (4) - - (614) (614)
Gross operating margin 175 3,149 3,418 918 177 179 3 8,019 8,019
Income from equity exchange
transaction - - - - 263 - - 263 263
Depreciation, amortization
and impairment losses 173 952 829 399 17 93 - 2,463 2,463
Operating income 2 2,197 2,589 519 423 86 3 5,819 5,819

Net financial
income/(expense) and
income/(expense) from
equity investments
accounted for using the
equity method - - - - - - - (651) (651)
Income taxes - - - - - - - 2,067 2,067

Net income (Group
and minority interests) - - - - - - - 3,101 3,101
Operating assets 6,948 16,752 16,875 10,008 1,013 1,771 (3,352) 50,015 50,015
Operating liabilities 6,272 4,019 4,042 4,037 1,275 1,128 (2,884) 17,889 17,889
Capital expenditure 56 897 1,459 467 13 71 - 2,963 2,963
(1) Segment revenues in the above tables include both revenues from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the year.
49
Continuing operations Discontinued operations

Domestic Domestic
Generat. Infrastruc. Services Eliminations Eliminations
Domestic and Energy and Parent and Other and Transmis. and
Millions of euro Sales Managem. Networks Internat. Company Activities adjustments Total Networks TLC adjustments Total TOTAL
Revenues from third parties 19,155 10,648 837 1,856 886 440 (35) 33,787 711 2,604 (62) 3,253 37,040
Revenues from other
segments 332 2,347 4,695 2 232 1,301 (8,909) - 29 144 (173) - -
Total revenues 19,487 12,995 5,532 1,858 1,118 1,741 (8,944) 33,787 740 2,748 (235) 3,253 37,040
commodity risk management (26) 326 - (14) (14) - - 272 - - - - 272
Gross operating margin 152 3,407 3,398 485 67 315 (79) 7,745 524 903 (1) 1,426 9,171
Depreciation, amortization
and impairment losses 140 1,009 770 178 14 96 - 2,207 118 736 - 854 3,061
Operating income 12 2,398 2,628 307 53 219 (79) 5,538 406 167 (1) 572 6,110
Net financial
equity investments
equity method - - - - - - - (744) - - - (240) (984)
Income taxes - - - - - - - 1,934 - - - 213 2,147
Gains on disposal of assets - - - - - - - - - - - 1,153 1,153

Net income (Group
and minority interests) - - - - - - - 2,860 - - - 1,272 4,132
Operating assets 6,465 16,468 15,708 4,282 1,263 2,945 (3,280) 43,851 - - - - 43,851
Operating liabilities 5,289 3,841 3,567 813 1,604 2,392 (3,137) 14,369 - - - - 14,369
Capital expenditure 53 798 1,570 299 11 98 - 2,829 142 286 - 428 3,257
(1) Segment revenues in the above tables include both revenues from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the year.
50
The following table reconciles segment assets and liabilities and the consolidated
figures.
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005
Total assets 54,500 50,502

Financial assets, cash and cash equivalents 2,107 3,203
Fiscal assets 2,378 3,448
Segment assets 50,015 43,851
- of which:
Parent Company 1,013 1,263
Eliminations and adjustments (3,352) (3,280)
Total liabilities 35,475 31,086

Loans and other financial liabilities 14,661 13,819
Tax liabilities 2,925 2,898
Segment liabilities 17,889 14,369
- of which:
International 4,037 813
51
Domestic Sales
The Domestic Sales Division is responsible for commercial activities, with the objective
of creating an integrated package of electricity and gas products and services for end-
users. The activities are carried out by:
Enel Distribuzione and Deval (the operations of the latter are limited to the Valle
d’Aosta region) for the sale of electricity on the regulated market;
Enel Energia (formerly Enel Gas) for the sale of electricity on the free market and
the sale of natural gas to end-users;
Enel.si, which is responsible for engineering and franchising.
Regulatory and rate issues
Electricity
Regulatory issues
In its decree of May 12, 2006, the Ministry of Communications established new rates
for mailing correspondence. This will have an impact on Enel (notably for the mailing of
utility bills to customers in the regulated market) of some €23 million per year, equal to
an increase in annual mailing costs of about 30%. Costs in 2006 amounted to about €7
million. At the moment, such costs have not be recognized by the Authority in rates for
end users. Enel has taken steps to obtain such recognition.
Rates and rate updates
The quarterly updates during 2006, as a national average net of taxes, were authorized
with the following resolutions: no. 299/05 for the 1st Quarter (up 2.6%); no. 61/06 for
the 2nd Quarter (up 6.9%); no. 132/06 for the 3rd Quarter (up 6.9%); and no. 207/06
for the 4th Quarter (up 1.7%). The overall national average level of rates in the 4th
Quarter of 2006 was more than 19% higher compared with 2005 (about €21/MWh),
which was essentially due to the increase in the component covering costs for the
purchase of electricity (about €13/MWh), as well as increases in the component
covering charges on generation from renewable resources (which nearly doubled to
about €5/MWh) and the increase in the component intended to reimburse stranded
costs (about €3/MWh).
On December 5, 2006, with its Resolution no. 275/06, the Authority updated the rate
component for the sale of electricity on the regulated market with an increase of 14%
for 2007.
With Resolution no. 321/06 of December 28, 2006, the Authority updated electricity
rates for the 1st Quarter of 2007 with a reduction in the national average of about
€2/MWh, or 1.6% of the total, in line with the average purchase price reduction of the
52
Single Buyer. In particular, the Authority reduced the component covering the cost of
raw materials and ancillary services by 8.4% (down €8/MWh), while offsetting this
reduction primarily with a sharp increase (up 250%) in the component covering
procurement costs over past levels, which will make it possible to recoup past
equalization imbalances by the end of 2007.
Inquiries and fact-finding investigations
On June 28, 2006, with Resolution no. 130/06, the Authority opened a formal inquiry
into Enel Distribuzione’s alleged failure to observe the provisions of Resolution no.
55/00 concerning invoice transparency. The violation underlying the Authority’s
measure concerns the absence, through February 2006, of indication on Enel’s
invoices as to the possibility of paying invoices free of charge. On December 11, 2006,
the Authority reported the results of the inquiry, which confirmed the charges against
Enel Distribuzione. On March 21, 2007, with Resolution no. 66/07, the Authority fined
Enel Distribuzione €11.7 million. Enel will appeal the decision as it feels that it operated
in full compliance with the regulations.
Enel is also waiting for the Council of State to set the date for the hearing of the appeal
of the ruling of the Lombardy Regional Administrative Court of November 9, 2005,
which rejected Enel’s petition concerning Resolution no. 72/04, which enjoined Enel
Distribuzione to fulfill the obligation established in Article 6.4 of Resolution no. 200/99,
arguing that the company failed to ensure that its customers had access to at least one
free-of-charge method of payment.
Rules for the sale of CIP 6 electricity by the Electricity Services Operator (ESO)
The decree of the Minister for Productive Activities (now the Minister for Economic
Development) of December 5, 2005, confirmed for 2006 the sale by the ESO of CIP 6
energy and the pro rata assignment of such energy to those requesting it, using contracts
for differences, based on average annual electricity consumption. The strike price of the
contracts for differences was set at €55/MWh for all hours in 2006. Based on the
instructions of the Ministry for Economic Development, the ESO assigned a total of
5,600 MW of CIP 6 energy, of which 60% (3,360 MW) to the free market (406 MW to
Enel) and 40% (2,240 MW) to the regulated market.
For 2007, the rules for the sale of CIP 6 energy were established with a decree of the
Minister for Economic Development on December 14, 2006, using a similar mechanism
to that of 2006. In particular, the decree reduces the share for the Single Buyer to 35%,
while the strike price for contracts for differences was set at €64/MWh for the 1st
Quarter of 2007 and will be adjusted during the year in the manner specified by the
Authority in relation to developments in the price index referred to in Article 5 of the
decree of the Minister for Productive Activities of December 19, 2003. The total
53
quantity assigned was 5,400 MW, of which 3,510 MW to the free market (639 MW to
Enel) and 1,890 MW to the regulated market.
Liberalization of electricity sales
In August 2006, the Authority for Electricity and Gas published a document surveying
the issues involved in the liberalization of the sale of electricity to all end-users, which
is scheduled for July 1, 2007. The purpose of the document is to identify the critical
issues concerning the complete liberalization of the market, as well as to define
possible safeguards. Certain actions require primary legislation, which is beyond the
Authority’s powers.
The document defines general mechanisms for safeguarding both all users and
specific mechanisms for certain categories of user. In particular, the Authority
distinguishes between:
a service safeguard mechanism covering all users – of an extraordinary, transitory
nature – so as to ensure that end-users do not find themselves without a provider
because, for whatever reason, they cannot find one (including the bankruptcy of
their current provider);
an enhanced service safeguard mechanism (for residential users certainly, but also
possibly for small businesses) in order to ensure service provision to those users
who, even subsequent to July 1, 2007, have not made the transition to the free
market.
The document outlines various alternative scenarios concerning the identification of

the providers of such services. These potential alternatives include:
introducing competitive systems for assigning electricity procurement and sale
activities;
introducing competitive systems solely for sales;
maintaining a situation similar to the one currently in place for procurement on the
regulated market, leaving procurement under the Single Buyer and sales to the
distribution companies (or to their affiliated sales companies).
On January 18, 2007, the Authority published a document containing recommendations

concerning the reform of the rates system for low-voltage residential users in
anticipation of the full liberalization of the market on July 1, 2007. The document also
contains proposals concerning the safeguards for particularly vulnerable categories of
user (underprivileged residential users or residential users with serious medical
conditions) with the so-called “social rates”.
54
Gas
In conjunction with the updating of the raw materials component of the supply prices of
natural gas for the 3rd Quarter of 2006, the Authority altered the updating criteria set out in
Resolution no. 248/04. The new Resolution no. 134/06 modifies certain parameters in the
formula for updating the raw materials component for Brent levels above $60/bbl and
grants an incentive of 50% of the losses for 2005 as compared with the previous rate
updating regulations in order to foster the renegotiation of wholesale supply contracts
for the 2005-2006 gas year.
For 2006, the new updating criteria provided for in Resolution no. 134/06 led to a 19%
increase in the raw materials component of supply rates.
In its plenary session of November 13, 2006, the Council of State definitively voided,
with universal validity, Resolution no. 248/04 for formal irregularities, thereby
confirming the voidance ordered by the Lombardy Regional Administrative Court in
2005. The first ruling published specified that the Authority has the power to take action
to correct the lapse of previous measures adopted with regard to rates. Subsequently,
a new version was published that no longer contained the specification of the
Authority’s power to intervene again. Enel is awaiting clarification concerning the legal
framework and any actions of the Authority in order to assess the financial impact of
the ruling.
With Resolution no. 131/06, the Authority opened a formal inquiry into Enel Gas (now
Enel Energia) for alleged violation of Article 11.1 of the commercial code of conduct,
which establishes the minimum content of contracts. More specifically, the inquiry
concerns the indications in “off-network” contracts regarding the methods and timing of
meter reading for invoicing purposes, payment methods, the frequency with which
invoices are issued, and the indication of certain automatic indemnities established for
customers. The results of the inquiry issued by the Authority partially revised the
charges. In particular, the Authority acknowledges that Enel Gas (now Enel Energia)
exercised proper conduct concerning the indication of invoicing and payment methods,
but it has confirmed the violations concerning the failure to indicate the indemnities or
the timing of meter readings. The inquiry is expected to be closed shortly.
55
Operating performance of Domestic Sales Division
Millions of euro
2006 2005 2006-2005
Electricity
Revenues 19,377 17,913 1,464
Net income/(charges) from commodity risk management 4 (26) 30
Gross operating margin 132 61 71
Operating income (9) (59) 50
Gas
Revenues 1,731 1,574 157
Gross operating margin 43 91 (48)
Operating income 11 71 (60)
Total
Revenues 21,108 19,487 1,621
Operating assets 6,948 6,465 483

Operating liabilities 6,272 5,289 983
Employees at year-end (no.) 5,176 5,994 (818)
Capital expenditure 56 53 3
Electricity sales
Millions of kWh
2006 2005 2006-2005
Sales on regulated market:

- high-voltage 4,819 5,319 (500) -9.4%
- medium-voltage 15,646 20,247 (4,601) -22.7%
- low-voltage 99,920 104,111 (4,191) -4.0%
Total for regulated market 120,385 129,677 (9,292) -7.2%
Sales on free market:

- high-voltage 11,848 11,226 622 5.5%
- medium-voltage 7,146 6,389 757 11.8%
- low-voltage 3,273 869 2,404 -
Total for free market 22,267 18,484 3,783 20.5%
TOTAL 142,652 148,161 (5,509) -3.7%
Electricity sold on the regulated market in 2006 came to 120,385 million kWh, a
decrease of 9,292 million kWh from the previous year due primarily to greater market
liberalization, which led to an increase of 3,783 million kWh in the volume of energy
sold on the free market in 2006.
56
Gas sales and customers
2006 2005 2006-2005
Gas sold (millions of cubic meters):

- Enel Group network 3,250 3,610 (360)
- third-party network 1,295 1,478 (183)
Total sales of gas 4,545 5,088 (543)
Customers at end of period (no.):

- Enel Group network 1,975,949 1,962,792 13,157
- third-party network 355,102 180,202 174,900
Total customers 2,331,051 2,142,994 188,057
Gas sales for 2006 totaled 4,545 million cubic meters, a decline of 543 million cubic
meters from the previous year. The decrease is attributable to the weather emergency
plan established with a decree of the Ministry for Productive Activities (now the Ministry
for Economic Development) of January 25, 2006, which led to a reduction in energy
consumption in the early months of the year, and to the unfavorable weather conditions
this past autumn and winter (leading to a fall of 17.5% in volumes in the 4th Quarter of
2006 compared with the corresponding period of 2005).
At December 31, 2006, customers served numbered some 2.3 million, an increase of
about 0.2 million over December 31, 2005. These trends are essentially due to the
increase in retail customers (those with consumption of less than 200,000 cubic meters
per year), thanks in part to the contribution of acquisitions in the gas area in the 4th
Quarter of 2005 and in 2006.
Operating performance
Total revenues for 2006 amounted to €21,108 million, up €1,621 million or 8.3% over
2005, due mainly to the following factors:
an increase of €1,464 million in revenues from electricity sales, related primarily to
the increase in sales revenues on the regulated market and transport revenues on
the free market (up €823 million) and prior-year items associated with electricity
purchases in previous years (€71 million). Other factors include the increase in
revenues from the sale of electricity on the free market in the amount of €325
million and revenues from transport and ancillary services in the amount of €270
million. The increases were partially offset by a reduction of €39 million in electricity
connection and activation fees;
an increase of €157 million in revenues from gas sales, mainly attributable to the
increase in unit prices, which more than offset the decline in volumes sold.
57
The gross operating margin amounted to €175 million, increasing by €23 million
compared with the €152 million posted in 2005. This increase is due to the following
factors:
for electricity (up €71 million), prior-year items associated with electricity purchases
in previous years (€71 million). The increase in the electricity margin (€59 million)
as a result of greater volumes sold on the free market was broadly offset by higher
costs for early retirement incentives;
for gas (down €48 million), primarily the effect of the application of Resolutions nos.
248/04, 298/05, 62/06 and 134/06 of the Authority for Electricity and Gas, which
altered the criteria used to update raw materials component of prices for gas
supplies, with a negative impact of €52 million. This was partially offset by
reimbursements for lower gas purchases in previous years.
Operating income, after depreciation, amortization and impairment losses in the

amount of €173 million (€140 million for the previous year), came to €2 million,
declining by €10 million from 2005. The main increases in depreciation, amortization
and impairment losses were a €10 million increase in impairment losses for the gas
area and an €8 million increase in provisions for doubtful trade receivables.
Capital expenditure
Capital expenditure amounted to €56 million, essentially in line with the figure for the
previous year.
58
Domestic Generation and Energy Management
This Division operates in the field of electricity generation and energy products.
In the context of the reorganization of the Division that began in 2004, Enel Produzione
acquired the engineering and construction unit serving the Enel Group from Enelpower
on January 1, 2006.
The activities of the Domestic Generation and Energy Management Division are as
follows:
the generation and sale of electricity:
- electricity generation in Italy through Enel Produzione;
- trading on international and domestic markets through Enel Trade;
the supply and sale of energy products through Enel Trade:
- procurement of energy products for all Group;
- the sale of natural gas to distributors;
engineering and construction through Enel Produzione.
Regulatory issues
Ancillary Services Market (ASM)

Following the high costs recorded on the ASM in April and May of 2006, the Authority
for Electricity and Gas issued Resolution no. 165/06 containing urgent measures to
limit ancillary service charges, taking effect as of August 1, 2006. The measures
established concerned:
the option for Terna to revoke the previously approved bids in the various phases of
the ASM without charge;
increased scope for Terna to operate on the day-ahead market;
a change in the method of calculating imbalance payments for major production
and consumption units in order to make them more consistent with the costs
incurred by Terna for real-time system balancing.
With Resolution no. 111/06, the Authority for Electricity and Gas revised the conditions
for ancillary services for 2007. The resolution introduced the so-called “Accounts
System”, designed to foster the integrated management of the spot and forward
markets, thereby enabling companies to adjust forward positions on the day-ahead
market.
With Resolution no. 253/06 of November 16, 2006, the Authority amended Resolution
no. 111/06 and postponed the launch of the Accounts System to April 1, 2007, from the
originally scheduled January 1, 2007.
59
With Resolution no. 314/06 of December 27, 2006, the Authority issued further
modifications to the rules governing the day-ahead market beginning in 2007. The main
changes concerned:
the possibility for Terna to use forward contracts for dispatching resources in 2007;
the extension to 2007 of the change introduced with Resolution no. 165/06
concerning the supplemental bids presented by Terna on the day-ahead market
(allowing intervention in the event of divergences of 2% between the forecast
needs of Terna and the total demand on the day-ahead market).
Single Buyer auctions

In May 2005, Enel exercised the long-term options provided by the contracts for
differences for 2006 in order to extend their validity through December 31, 2006 and
December 31, 2007, for 6,660 MW and 5,550 MW, respectively. Furthermore, between
October and November 2005, the Single Buyer held three more auctions for contracts
for differences in order to cover its needs for 2006. Enel Produzione was awarded
2,200 MW (out of a total of 2,500 MW) for all hours of the year from the first auction,
and a further 1,100 MW for the 1st Quarter of 2006 from the other two auctions.
Finally, between November and December 2006 the Single Buyer held three further
auctions for contracts for differences in order to cover its needs for 2007. The capacity
contracted out totaled 1,216 MW. Enel Produzione was awarded 700 MW through two-
way contracts for differences.
Capacity payments
With Resolution no. 104/06, the Authority established the capacity payment fees
remunerating the availability of generation capacity for the period from January 1 to
December 31, 2006, pending the start of the definitive remuneration system as defined
by Article 1 of Legislative Decree 379/03. The transitory remuneration mechanism for
available capacity for 2006 is in line with that of 2004 and 2005.
CIP 6 plants
With Resolution no. 249/06, the Authority introduced a new method for updating the
CIP 6 energy withdrawal price component related to the avoided fuel cost, so as to
bring it more closely into line with the market price of natural gas in Italy. In particular,
the value assigned to this component for 2007 was set at:
€60.50/MWh for the “selected initiatives” referred to in Article 3(7) of Law 481/95
(plants of producers other than generator-distributors);
€57.13/MWh for Enel’s generation plants that began operating in 1997-1998;
€55.20/MWh for those that entered service in 1999-2000;
€53.10/MWh for those that entered service in 2001-2002.
60
The 2007 Finance Act (Law 296 of December 27, 2006) excluded plants powered by
authorized sources treated as renewables for which construction has yet to begin from
the scope of CIP 6 incentives. The law also establishes that the Minister for Economic
Development shall redefine the amount and duration of support for resources treated
as renewable resources used by plants already in service. However, the law did not
affect the existing rules governing electricity generation set out in Article 11(14) of
Decree Law 35 of March 14, 2005, ratified with amendments by Law 80 of May 14,
2005 (concerning electricity generation using the Sulcis coal basin).
Electricity imports
On December 13, 2005, the Minister for Productive Activities (now the Minister for
Economic Development) issued a decree to define the procedures and conditions for
importing electricity in 2006. The decree assigned the regulated market 26% of import
capacity, in addition to the capacity set aside for long-term contracts, as in 2005.
In implementation of the decree, the Authority for Electricity and Gas issued Resolution
no. 269/05 governing electricity imports and exports for 2006. In particular, the
resolution modified the mechanism for assigning coverage of the price difference
between the foreign area and the area in which the electricity is imported (associated
with the risk of congestion on cross-border networks), thereby eliminating the free pro
rata assignment as applied in 2005 in order to fully comply with EU regulations with
regard to congestion management. For 2006, coverage is now assigned by explicit
auction, which calls for pro rata reimbursement based on the average annual power of
the assignee. However, the reimbursement is subject to a cap in the event the
participating party has power of greater than 10% of the total.
For 2007, the rules for electricity imports were established with a decree of the Minister
for Economic Development on December 15, 2006, and by Authority Resolution no.
288/06. For 2007, rights to use transport capacity on the borders with France, Austria,
and Greece will be assigned through competitive procedures based on methods
defined in the agreements between Terna and the system operators of the
interconnected countries for the joint allocation of available capacity. The revenues
from the auctions for each of the borders are to be distributed equally among the
competent system operators.
Conversely, rights to use transport capacity on the borders with Switzerland and
(through July 1, 2007) Slovenia will continue to be assigned separately by the
respective system operators, with Terna holding auctions to allocate the rights to use
its own portion of capacity (50%).
Up to 30% of Terna’s share of the revenues from the assignment procedures will be
allocated to the Single Buyer, with the remainder going to customers on the free market
on a pro rata basis based on capacity.
61
Temporary measures concerning the reduction of gas consumption
In early 2006, gas supplies to Italy came under severe strains, making protracted
recourse to national reserves necessary and causing concern about the security of gas
supplies. The situation was caused by an increase in demand in Italy and reductions in
the flow of imported gas.
On January 25, 2006 the Council of Ministers issued a decree, subsequently ratified
with Law 108 of March 8, 2006, containing urgent measures to ensure natural gas
supplies. The measures envisaged in the decree included a number of changes to
operating conditions at thermal power plants in order to contain the consumption of gas
for electricity generation. Specifically, these included:
the authorization for the restart, until March 31, 2006, of oil-fired plants with a power
capacity of more than 300 MW that were not in service owing to the restrictions
contained in the related ministerial authorizations. The measures enabled third-
party generation plants with a capacity of about 2,000 MW to re-enter service;
the possibility to suspend, until March 31, 2006, emissions restrictions on oil-fired
plants. This suspension permits the operation of oil and multifuel plants and regards
the Enel power plants at Montalto di Castro, Piombino, Rossano Calabro, Termini
Imerese, Cavriglia and Livorno.
On March 31, 2006, the Ministry for Productive Activities (now the Ministry for
Economic Development), acting in concert with the Ministry for the Environment,
adopted a decree that establishes the procedures for the return to normal service of the
Montalto di Castro power plant. The decree also established the emissions limits
applicable during the temporary period of operation until August 31, 2006.
On August 1, 2006, the Authority for Electricity and Gas issued Resolution no. 178/06
defining the methods for reimbursement of the greater costs incurred for the use of oil-
fired plants. The Authority’s measures appear to be in line with the need to reimburse
the additional costs actually incurred by generation companies during the “gas
emergency”. The mechanism of Resolution no. 178/06 is based on a comparison of the
generation costs actually incurred and those that would potentially have been incurred
without the provisions of Law 108/06, while also reimbursing the incremental fixed
costs incurred as a result of the restrictions set by this law (e.g. costs caused by the
change in the operating conditions of dual-fuel generation units). The difference
between these actual and potential costs, while also taking account of the market value
of any gas that may have been made available to the generation company as a result
of not being used in electricity generation, represents the additional costs incurred for
which the company has the right to reimbursement.
The actual amount of the reimbursement for each company is to be established
following the reconstruction of the effective costs of the plants, which the Authority will
62
determine on the basis of self-certified statements of the individual generation
companies and the findings of its own inquiry. The Authority will then issue a further
measure to define the methods for disbursing the amounts due, which will be
recognized under the general charges for the security of the natural gas system.
In order to avoid repeating the risk of system crisis for the 2006-2007 winter season,
the Ministry for Economic Development introduced certain precautionary measures.
The decrees of August 4, 2006, make it mandatory for shippers to:
maximize imports beginning on November 13, 2006;
hold a share of interruptible customers in their portfolios;
release unused import capacity.
The sanctions for failure to comply with these requirements are in line with the severe
penalties for drawing on strategic stores without ministerial authorization.
On December 18, 2006, the Ministry for Economic Development updated the weather
emergency procedures set forth in its decree of December 12, 2005.
The new procedures essentially mirror the provisions previously implemented for 2006.
The system is subject to constant monitoring by Italian natural gas transport and
electricity transmission companies. Once system strains are detected, these
companies are to begin implementing a series of actions aimed at increasing gas
availability, including:
maximizing imports and eliminating penalties for peak excesses in imports and
additions to stores;
the interruption of industrial customers with interruptible supply contracts. The decree
also establishes civil liability for sellers required to ensure 10% interruptibility of their
industrial supplies;
operation of multi-fuel plants with oil instead of gas;
further actions aimed at reducing civil and thermoelectric consumption.
Should the risk of crisis persist, the procedures also envisage the issuance of
extraordinary measures to increase electricity generation, such as the temporary
elimination of environmental limits for fuel-oil plants.

With regard to the inquiry opened by the Competition Authority on April 6, 2005,
concerning Enel SpA and Enel Produzione for alleged competition-limiting conduct on
the Power Exchange in 2004 and 2005, on May 17, 2006, the Competition Authority
reported the results of its inquiry and confirmed its charges of abuse of dominant
position.
63
On October 17, 2006, exercising the option envisaged under Law 248/2006, Enel SpA
and Enel Produzione notified the Competition Authority of commitments to take steps
aimed at removing the anti-competitive conduct found during the antitrust inquiry, so as
to be able to close the inquiry without an adverse ruling or sanctions.
Enel SpA and Enel Produzione have committed to providing the market with a virtual
power plant (VPP) in the form of two-way contracts for differences for a total of 1,000
MW for 2007 and 700 MW for 2008. Following a 30-day market test, this commitment
was made mandatory with the Authority’s resolution of December 20, 2006, which
closed the inquiry into abuse of dominant position without confirming the infraction.
The procedure for assigning the VPP for 2007 was concluded on December 29 with the
allocation of all the capacity provided to the 25 companies selected.
On October 4, 2006, with Resolution no. 217/06, the Authority for Electricity and Gas
opened a fact-finding investigation of the supply interruption that involved the electrical
system in Sicily on July 17, 2006. As concerns Enel Produzione, the investigation is
intended to verify the methods for applying safety criteria and complying with the orders
issued by Terna to ensure system safety. Another goal of the investigation is to identify
any specific steps that can be taken to make Sicily’s electrical system more robust.
With Resolution no. 54/04 of April 1, 2004, the Authority for Electricity and Gas initiated
an inquiry involving Enel Produzione on the lack of availability of generation capacity
that led to scheduled brown-outs on June 26, 2003. At the end of the first phase of the
formal inquiry, Enel Produzione paid a reduced fine pursuant to Article 16 of Law
689/81. With Resolution no. 10/05, the Authority concluded the formal inquiry on
January 29, 2005 without imposing sanctions on Enel Produzione, recognizing the
validity of the payment made. On the basis of the findings of the inquiry, with
Resolution no. 11/05, the Authority, in defining terms for the remuneration of reserve
services for the first six months of 2003, invited the ISO (GRTN, now the Electricity
Services Operator – ESO) not to pay Enel Produzione for services provided during this
period. Enel appealed both measures, demanding at the same time that the ISO make
the payment due. At the hearing for the appeal of Resolutions nos. 10/05 and 11/05,
which was held on July 12, 2005, the Lombardy Regional Administrative Court upheld
Enel's appeal and voided the portion of the resolutions inviting the ISO not to reimburse
Enel Produzione for reserve services provided. On October 31, 2005, the ISO then
calculated the amount due as €76 million. However, the Authority has appealed the
regional court’s ruling, which partially voids Resolutions nos.10/05 and 11/05, and we
await the setting of a hearing date by the Council of State.
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With Resolution no. 230/06 of October 18, 2006, the Authority fined Enel SpA the
amount of €1 million following the outcome of the formal inquiry initiated with
Resolution no. 108/05 concerning the disclosure obligations on gas import contracts as
required by Resolution no. 188/04. Enel paid the fine without filing an appeal with the
administrative court.
With Resolution no. 283/06, the Authority fined Enel Trade the amount of €24 million.
The sanction was established upon conclusion of a formal investigation into various
users of stores, including Enel Trade, for inappropriate use of space and peak
modulation storage capacity granted for gas years 2004-2005 and 2005-2006. Enel
Trade participated in the proceedings, submitting its own defense brief.
The new interpretation of prevailing legislation, in contrast with a longstanding practice
justified by the technical characteristics of the system, forces companies to cope with
stringent operating constraints and difficulties applying the legislation during the current
year, as well. Enel Trade has filed an appeal against Resolution no. 283/06.
Other measures by the Authority for Electricity and Gas to promote competition
On August 4, 2005, as a further measure to limit market power, the Authority adopted
Resolution no. 175/05, which transferred management of pumping plants that are
strategic to system security away from industry companies and entrusted them to
Terna – Rete Elettrica Nazionale. Based on this resolution, Terna indicated that the
capacity of these strategic pumping plants came to 5,940 MW, or nearly the entire
capacity of all pumping plants operating in Italy. According to the resolution, the plants
are to be managed by Terna, which is to be paid a regulated fee for this service. Enel
challenged the resolution before the regional administrative court, which, on February
28, 2006, upheld the appeal and voided the resolution, ordering the Authority to
compensate Enel for any losses incurred (a right which Enel waived). On May 25,
2006, the Authority for Electricity and Gas filed an appeal of the Court’s ruling, with
Terna also intervening in the appeal in support of the Court’s judgment. We are
awaiting the related hearing to be set by the Council of State.
With Resolution no. 212/05 of October 7, 2005, the Authority required Enel to enter into
forward contracts (the so-called “virtual power plant”) with counterparties to be selected
by competitive auction for 3,600 MW for the southern macro-area and 200 MW for the
Sicily macro-area. On October 28, 2005, Enel filed an appeal with the Lombardy
Regional Administrative Court against Resolution no. 212/05. At a hearing held on
January 17, 2006, the court upheld Enel’s appeal of Resolution no. 212/05, which was
therefore voided. The Authority filed an appeal of the ruling issued by the court of first
instance, and the Council of State, in a hearing held on February 6, 2007, rejected the
Authority’s appeal. At the end of 2005, in accordance with the provisions of Resolution
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no. 212/05, Enel Produzione had organized competitive auctions for the sale of forward
contracts, but no participants came forward for the auctions.
Emissions trading
With regard to the Emissions Trading Scheme (ETS), despite the issues that have yet to
be resolved concerning the launch of the National Registry of emissions and the
issuance of allowances to the plants that began operations in 2005, Enel has returned
the allowances corresponding to 2005 emissions in accordance with the deadlines and
procedures established by the law.
As concerns the period 2008-2012, as called for by Directive 2003/87/EC, the national
allocation plans were to have been presented to the Commission by June 30, 2006. On
November 29, 2006, the European Commission published its communication
COM(2006) 725 containing the criteria followed by the Commission in examining the
national plans and requesting any changes.
Italy’s national allocation plan was filed with the European Commission on December 18,
2006, and a decision by the Commission is expected by the summer. The new plan sets
an average annual cap for the thermal segment for 2008-2012 of 116.5 million metric
tons of CO2, 10.3 million metric tons of which against payment.
In particular, Enel Produzione’s existing plants were allocated average annual emission
allowances of 40 million metric tons, 34 million metric tons of which free of charge and
some 6 million metric tons against payment. Added to these will be the allowances for
new entrants such as the Torrevaldaliga Nord plant. Depending on the European
Commission’s decision, these allocations may be revised.
As for the allocation of CO2 allowances for the 2005-2007 period, Enel Produzione’s
plants have been allocated 48.2 million metric tons in emission allowances for 2005,
40.5 million metric tons for 2006, and 39.9 million metric tons for 2007. Following a
subsequent recalculation, the allowances allocated for 2006 and 2007 were set at 39.7
and 41.0 million metric tons, respectively. The actual emissions exceeded these
allowances by about 8.0 million metric tons in 2005 and 11.4 million metric tons in
2006. In order to cover the deficit, Enel Produzione has turned to the spot market for
some 18.1 million metric tons (14.2 million metric tons of which were purchased in
2006) and the forward market for about 0.1 million metric tons. The remaining deficit of
1.2 million metric tons has been valued at the market price of the end of the period.
Recognition of costs for green certificates for the regulated market

With Resolution no. 8/04, the Authority for Electricity and Gas defined the terms for
reimbursement to be recognized to electricity producers that fulfilled the obligations
established by Article 11(1) of Legislative Decree 79/99 (green certificates), relating to
the generation and imports for 2001 destined for the regulated market. With this
66
resolution, the Authority did not recognize the full costs incurred by Enel in fulfilling the
obligations of Article 11 regarding electricity for the regulated market. Enel therefore
appealed the resolution to the Lombardy Regional Administrative Court, but it was
rejected by the court. The court did state that Enel was due some form of
compensation for those certificates that were acquired in relation to non-renewable
resources used to run pumping stations. Enel appealed the unfavorable ruling of the
Lombardy Regional Administrative Court. On March 21, 2006, the Council of State
upheld the ruling of the lower court.
Subsequently, with Resolution no. 101/05, the Authority established the reimbursement
of charges incurred for the purchase of green certificates related to electricity
generation and imports for the regulated market for 2002. With this resolution, the
Authority also established the recognition of green certificates for electricity generated
with pumping stations both for 2001 (in compliance with the court’s ruling on Resolution
no. 8/04) and for 2002. Enel has also filed an appeal with the Regional Administrative
Court against Resolution no. 101/05, as this resolution only called for partial
reimbursement of the charges incurred. The court rejected the request for full
reimbursement of the charges for green certificates purchased by Enel Produzione, but
partially upheld the appeal by establishing that, for the pumping stations, the green
certificates should be voided in relation to electricity generated and not to electricity
consumed. The court granted Enel Produzione the option to request that the ISO repay
the excess amounts paid in relation to green certificates purchased for the pumping
stations’ consumption. The Authority filed an appeal of the ruling with the Regional
Administrative Court for the portion related to the charges for green certificates for the
pumping stations. Enel has filed a cross appeal of the court’s ruling on Resolution no.
101/05 as concerns the partial reimbursement of green certificates. We are awaiting a
hearing before the Council of State in that regard.
With regard to the charges incurred for the purchase of green certificates related to
electricity generation and imports for the regulated market in 2003 and the 1st Quarter
of 2004, i.e. prior to the launch of the Power Exchange, on January 24, 2006, Enel
requested that the Authority reimburse such charges. The Authority rejected Enel’s
request in a letter dated January 27, 2006. Enel has appealed the Authority’s decision
before the Regional Administrative Court, whose ruling is pending.
Amendment of regulations governing green certificates

With Legislative Decree 152 of April 3, 2006 (the Consolidated Environmental Act), the
period of validity of green certificates has been extended from eight to twelve years.
With regard to renewable energy resources, the 2007 Finance Act has also repealed
Article 1(71) of Law 239 of August 23, 2004 (which called for the assignment of green
67
certificates for co-generation combined with district heating), and removed from the
green certificate system the non-biodegradable component of waste in line with
Directive 2001/77/EC for the promotion of renewable energy resources. The Finance
Act also amended the legislation concerning green certificates with the goal of
promoting the use of bio-mass for energy purposes, establishing that the Minister for
Economic Development, in agreement with the Minister for Agricultural Policies, shall
issue the related decree.
Operating performance of the Domestic Generation and Energy Management Division
Millions of euro
2006 2005 2006-2005
Revenues 15,661 12,995 2,666

Net income/(charges) from commodity risk management (705) 326 (1,031)
Gross operating margin 3,149 3,407 (258)
Depreciation, amortization and impairment losses 952 1,009 (57)
Operating income 2,197 2,398 (201)
Operating assets 16,752 16,468 284

(1)
Employees at year-end (no.) 9,573 9,006 567
(1) Of which 760 employees added as the result of the acquisition of the unit from Enelpower on January 1, 2006.
Net electricity generation
Millions of kWh
2006 2005 2006-2005
Thermal 73,842 81,823 (7,981) -9.8%

Hydroelectric 24,475 24,883 (408) -1.6%
Geothermal 5,195 5,012 183 3.7%
Other resources 398 369 29 7.9%
Total net generation 103,910 112,087 (8,177) -7.3%
In 2006, net electricity generation totaled 103,910 million kWh, a decrease of 7.3%
from 2005. More specifically, thermal generation declined by 7,981 million kWh, while
hydroelectric fell by 408 million kWh. These declines were partially offset by increases
in geothermal generation of 183 million kWh and wind generation of 30 million kWh as
a result of the entry into service of new plants.
68
Contribution to gross thermal generation
Millions of kWh
2006 2005 2006-2005
High-sulfur fuel oil (S>0.25%) 7,704 9.8% 5,253 6.0% 2,451 46.7%
Low-sulfur fuel oil (S<0.25%) 8,330 10.6% 10,943 12.6% (2,613) -23.9%
Total fuel oil 16,034 20.4% 16,196 18.6% (162) -1.0%
Natural gas 33,402 42.4% 39,072 45.0% (5,670) -14.5%

Coal 29,010 36.9% 31,469 36.2% (2,459) -7.8%
Other fuels 256 0.3% 209 0.2% 47 22.5%
TOTAL 78,702 100.0% 86,946 100.0% (8,244) -9.5%
In 2006, the fuel mix used in thermal generation saw a decrease in natural gas and a
rise in the use of fuel oil.
Gross thermal generation posted an overall decline of 9.5% from 2005. In particular,
while fuel oil generation remained essentially unchanged, the reduced generation from
natural gas (down 14.5%) is related to the decree of the Ministry for Productive
Activities (now the Ministry for Economic Development), which established certain
changes in the operating conditions of thermal plants in early 2006 in order to reduce
the consumption of gas for electricity generation. Finally, the decrease in thermal
generation using coal (down 7.8%) was affected, above all, by the greater flexibility of
this type of plant in responding to market needs, as well as by the downtime in the
latter part of 2006 at Units 1 and 2 of the Fusina plant to enable environmental
upgrading.
Enel’s net efficient domestic generation capacity
MW
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
(1)
Thermal plants 25,117 26,902 (1,785)
Hydroelectric plants 14,379 14,363 16
Geothermal plants 671 671 -
Other resources 308 280 28
Total 40,475 42,216 (1,741)
(1) Of which 2,605 MW unavailable due to transformation activities and 287 MW unavailable due to long-term technical issues.
Net efficient domestic generation capacity at December 31, 2006 declined by 1,741 MW
from the figure recorded at the end of 2005. The fall is primarily attributable to the
thermal plants, which saw the final deactivation of certain plants that were already
partially unused (a reduction of 1,404 MW) and the deactivation of Unit 1 of the
69
Torrevaldaliga Nord plant (a reduction of 643 MW). These factors were partially offset by
a rise in generation capacity of the Santa Barbara plant (an increase of 262 MW).
Revenues for 2006 amounted to €15,661 million, up €2,666 million (up 20.5%) from
2005, due mainly to the following factors:
a €1,022 million increase in revenues related to trading on international markets,
€831 million related to growth in business on the domestic free market, and €422
million related to growth in the sales of electricity to other Divisions of the Group;
a €454 million increase in revenues from electricity sales on the Power Exchange
due both to the increase in remuneration of ancillary services and to the recognition
of the contribution in respect of costs incurred for the “gas emergency”, as called for
by the Authority for Electricity and Gas, which established the methods for the
reimbursement of such costs with Resolution no. 178/06;
a €114 million increase in revenues from the sale of fuel for trading, resulting from
the net effect of the €209 million increase in revenues from gas sales and the €95
million decline in sales of other fuels;
the recognition of €110 million in revenues for contract work in progress related to
activities abroad (in Spain, El Salvador and Bulgaria) following the acquisition from
Enelpower in January of the engineering and construction business unit;
a €92 million increase in revenues for the benefits resulting from the
implementation of settlement agreements with Siemens (€51 million) and the
settlement of prior-year items with the ISO, now Terna (€41 million);
the recognition, in 2005, of prior-year regulatory items in the amount of €438 million
related to reserve services provided to the ISO (now the Electricity Services
Operator) from 2002 to March 31, 2004 (€338 million) and to the reimbursement of
charges incurred in 2002 and 2003 for green certificates granted by the Authority
for Electricity and Gas with Resolution no. 101/2005 (€100 million). These items
were partially offset by the effects of the application in 2005 of Resolution no.
20/04, which involved an adjustment in the price of electricity sold to Enel
Distribuzione and the ISO (now the ESO) in March 2004 in the amount of €191
million;
a reduction of €67 million in revenues from transactions on the Power Exchange,
mainly attributable to smaller capacity payments (€65 million in 2006, compared
with €133 million in 2005, which also included the variable portion for 2004).
The gross operating margin came to €3,149 million, down €258 million or 7.6% from
the €3,407 million posted in 2005. This reduction is essentially attributable to the lower
contribution of prior-year items recognized in 2005 (€247 million), as well as the change
70
in the fair value of contracts for differences (down €146 million) and greater costs for
early retirement incentives (€91 million). These changes were partially offset by an
improvement in the generation margin (€145 million) and the benefits of the settlements
with Siemens and prior-year items settled with the ISO (now Terna) for a total of €92
million.
Operating income came to €2,197 million, down €201 million or 8.4% from 2005.
The decline in the gross operating margin described above was partially offset by the
benefits resulting from the €57 million decrease in provisions for impairment losses.
Capital expenditure
Millions of euro
2006 2005 2006-2005
Generation plants:
- thermal 627 487 140 28.7%
- hydroelectric 130 178 (48) -27.0%
- geothermal 77 84 (7) -8.3%
- other resources 31 19 12 63.2%
Total generation plants 865 768 97 12.6%
Other investments in property, plant and equipment 15 10 5 50.0%

Investments in intangible assets 17 20 (3) -15.0%
TOTAL 897 798 99 12.4%
Capital expenditure came to €897 million, €865 million of which for generation plants.
The main investments for 2006 concerned the continuation of projects on thermal
plants in the amount of €627 million (including the coal conversion of the Torrevaldaliga
Nord plant for €303 million and the transformation of the Santa Barbara plant to
combined cycle for €55 million), the refurbishing/repowering of various hydroelectric
plants in the amount of €130 million, and various projects concerning geothermal
generation plants (€77 million, including €25 million for drilling as part of the mining
activities for new geothermal generation development opportunities) and wind plants
(€31 million).
71
Domestic Infrastructure and Networks
The Domestic Infrastructure and Networks Division is responsible for operating the
electricity and gas distribution networks.
The activities are carried out by:
Enel Distribuzione and Deval (the latter’s operations are limited to the Valle d'Aosta
region) for the distribution of electricity to the free and regulated markets;
Enel Rete Gas for the distribution of gas;
Enel Sole for public and artistic lighting.
Electricity
Regulatory issues
At the end of September 2006, the Authority began proceedings to determine the rates
for the transmission, distribution and metering of electricity (Resolution no. 208/06) and
set service quality parameters for those services (Resolution no. 209/06), which will
come into force in the 2008-2011 regulatory period.
As regards rates, the Authority plans to refine the mechanisms for promoting service
efficiency and the incentives for the development of transmission infrastructure and
metering devices. As part of the ongoing liberalization of the electricity sector, rate
mechanisms will be simplified and the rate system for connections and other flat-rate
fees will be adjusted.
As regards service quality, in the 2008-2011 period a number of changes on which the
Authority is already working is due to come into effect. They include the regulation of
the quality of the call centers of commercial companies and the extension of
indemnities for failure to meet service continuity standards to low-voltage customers.
On December 18, 2006, with Resolution no. 292/06, the Authority introduced the
requirement for distributors to install new digital meters on the premises of all low-
voltage customers between 2008 and 2011, following a roll-out plan divided into four
stages: at least 25% of the new meters must be installed by 2008, 65% by 2009, 90%
by 2010 and 95% by 2011. The resolution also confirmed the recognition in rates of the
capital expenditure on electronic metering devices and remote control systems only for
operators that have effectively carried out such expenditure, and announced the
activation of an equalization mechanism to discourage suppliers from failing to install
the new devices or delaying the replacement of existing electromechanical meters.
72
Administrative and accounting unbundling
With Resolution no. 11/07 the Authority approved the integrated text of measures
regarding administrative and accounting unbundling for companies operating in the
electricity and gas industry and the related publication and notification requirements.
The measure amends the previous rules governing administrative and accounting
unbundling (Resolutions nos. 310/01 and 311/01), establishing rules for functional
separation in order to ensure, among other things, the independence of the managers
that operate essential infrastructure. It also provides for the functional separation of the
measurement and registration of metering data as from 2010 for the distribution of
electricity and as 2012 for the distribution of natural gas. The integrated text also allows
the option, which Enel has elected, to apply the new regulations governing unbundling
as from 2008.
With Resolutions nos. 203/06 and 275/06 issued in September and December 2006,
respectively, the Authority updated the rates for distribution services for 2007. The
adjustment is in line with the level established in 2006, when the price cap was set
assuming annual consumer price inflation of 1.9%, and an annual average fixed
investment deflator of 2.6%. Connection and other fixed fees were also reduced by
1.6% (about €10 million) entirely as a result of the price-cap effect.
Resolution no. 275/06 also updated the rate component for metering activities (MIS).
Specifically, the component was increased by 12%. In line with this change, the
distribution rates for residential customers for 2007 were updated. For these
customers, the validity of the additional rate plans approved for 2006 was extended
until June 30, 2007, i.e. until the complete liberalization of the residential market
scheduled for July 1, 2007. The extension does not prejudice the right of operators to
suspend the options or modify them in relation to the D1, D2 and D3 rates that came
into effect on January 1, 2007.
With Resolution no. 202/06 of September 20, 2006, the Authority approved the value of
Deval’s specific company adjustment factor for revenues eligible to cover distribution
costs for 2004. This value allows an increase in equalized eligible revenues of about
€1.6 million, compared with around €1.2 million originally recognized by the Electricity
Equalization Fund during the preparatory phase in June 2006.
Energy efficiency
With Resolution no. 293/06, in implementing the ministerial decrees of July 20, 2004,
which established the targets for increasing energy efficiency in end-user consumption
for the period 2005-2009, the Authority established the energy savings targets for 2007
73
at 633 ktep at the national level. The Enel Group incurs 61% of this savings, equal to
about 385 ktep. For 2006, Enel achieved the energy savings targets of 187 ktep, or
60% of the national target.
Service quality and continuity
As of 2006, the integrated text has included a new service continuity parameter, which
sets a maximum number of permissible supply interruptions for high-voltage and
medium-voltage customers, which varies depending on the population densities of the
areas. Distribution companies are liable to penalties if the number of service
interruptions to larger high and medium-voltage customers exceeds the limit set by the
Authority. The fines will be paid out in the form of automatic individual indemnities to all
high- and medium-voltage customers who have received the worst service, regardless
of size, as long as they can demonstrate that their electricity systems meet the
minimum technical standards set by the Authority. If customers fail to upgrade their
systems, they will be liable to pay a specific rate charge (SRC) to distributors. The
charges are therefore structured so that customers that fail to comply with the technical
standards will pay an appropriate penalty.
On November 21, 2006, with Resolution no. 257/06, the Authority published the level of
continuity of the electricity supply service for 2005, which shows that Enel Distribuzione
improved its performance by 12% compared with 2004, for which it received bonus
payments amounting around €118 million.
With Resolution no. 237/06, the Authority for Electricity and Gas initiated an inquiry
relating to the possible imposition of a fine on Enel Distribuzione for its failure to meet
its obligation under Resolution no. 200/99 to take meter readings at least once a year
from customers with contracts for supplies of up to 30 kW. The inquiry covers the years
2003, 2004 and 2005. The Authority will issue its final decision in June 2007.
With Resolution no. 152/04, the Authority initiated a formal inquiry to determine the
possible responsibility of electricity generators, distributors and the ISO (GRTN, now
the Electricity Services Operator – ESO) concerning the blackout of September 28,
2003. On December 15, 2006, the Authority closed the inquiries concerning generators
with regard to sanctions without issuing penalties in view of the reduced fines they paid
in settlement. With Resolution no. 274/06 of December 5, 2006, the Authority closed
the formal inquiries concerning certain distribution firms and consortia, again without
levying fines. More specifically, concerning Deval, it was established that load-
reduction equipment operated as expected at the time of the interruption. The inquiries
concerning Enel Distribution and five other parties are still open, as are the inquiries
74
concerning generators concerning the possible adoption of prescriptive measures. The
deadline for the closure of the inquiry has been extended to May 31, 2007.
Gas
With Resolution no. 122/05, transposing the ruling of the Lombardy Regional
Administrative Court, which partially voided Resolution no. 170/04, the Authority
introduced the principle of recognition of new investments carried out by the distributor
in the distribution rate.
Pursuant to a ruling by the Council of State, the Authority issued Resolution no. 218/06,
which amended the rate methodologies used for the most recent three gas years
(October 2005 - September 2008) of the current regulatory period. Specifically, the
Resolution provides for:
productivity gain rates of 4.8%, 4.6% and 4.4% for the gas years 2005-2006, 2006-
2007 and 2007-2008, compared with a constant value of 5% as envisaged in
Resolution no. 170/04. This measure complies with the ruling of the Council of
State, which required the price cap to decrease in the regulatory period;
a further reduction of the “X factor” for distribution companies that have carried out
business combinations and thus contributed to a reduction in their total number. A
preliminary estimate suggests that Enel should see an average annual reduction of
around 2% in its X factor over the next two years;
the option for start-up plants, i.e. those in the first three years of operations, to
waive the rate-setting freedom granted to them and set their rates, as from the gas
year 2005-2006, using the same criteria for ordinary plants. In this case, they may
access a “compensation fund for high-cost areas” established with the Electricity
Equalization Fund to mitigate the rate impact of the substantial investments made
during the start-up period.
The Resolution has a positive impact on Enel of €1.1 million for 2006, about €5 million
for 2007 and about €8 million for 2008.
Distribution concessions
The “thousand extensions” decree (Decree Law 273 of December 30, 2005, ratified on
February 23, 2006, and published in Gazzetta Ufficiale no. 49 of February 28, 2006)
set the end of the transition period at December 31, 2007, with the possibility of an
automatic extension of no more than two years in the event that at least one of the
conditions indicated in Article 15(7) of the Letta Decree was met. The validity of the gas
distribution concessions held by Enel has thereby been extended until December 31,
75
2009. These can be extended for an additional year (until December 31, 2010), upon
approval of the local authority granting the concession for substantiated reasons of
public interest.
Finally, the decree establishes that concessions for which public funding has been
provided (Law 784 of November 28, 1980 and Law 266 of August 7, 1997) are to
expire in 2012 or, if later, twelve years after the entry into force of the Decree of the
Ministry for the Economy and Finance that approved the final results of action.
As regards the indemnity due to operators for concessions whose expiry is brought
forward of their natural expiry date as a result of the above legislation, Article 15(5) of
the Letta Decree establishes that the new operator shall pay reimbursement calculated
on the basis of the provisions of the agreements or contracts and, where the intention
of the parties cannot otherwise be determined, on the basis of an industrial estimate of
the plants.
The Energy Bill approved by the Council of Ministers in June 2006 seeks to bring
greater efficiency to the industry through the geographical aggregation of gas
distribution activities.
Assessment of the safety of gas systems
Resolution no. 40/04 established complex administrative procedures for new

connections to the distribution network. Since July 1, 2005 this has produced long
delays in the activation of new accounts. Resolution no. 87/06 of April 22, 2006
simplified Resolution no. 40/04 by allowing the distributor to activate supply even if the
customer has submitted incomplete documentation. The Resolution gives local
municipalities the power to carry out direct inspections of the gas installations, at the
expense of the customer who has failed to complete the procedures.
76
Operating performance of the Domestic Infrastructure and Networks Division
Millions of euro
2006 2005 2006-2005
Electricity
Revenues 5,421 5,231 190
Gross operating margin 3,297 3,247 50
Operating income 2,558 2,552 6
Gas
Revenues 286 301 (15)
Total
Revenues 5,707 5,532 175
Gross operating margin 3,418 3,398 20
Operating income 2,589 2,628 (39)
Operating assets 16,875 15,708 1,167

Employees at year-end (no.) 24,701 25,769 (1,068)
Capital expenditure 1,459 1,570 (111)
Electricity distribution and transport networks

2006 2005 2006-2005
High-voltage lines at year-end (km) 18,804 18,952 (148)

Primary substations at year-end (no.) 2,047 2,025 22
Medium-voltage lines at year-end (km) 336,517 335,151 1,366

Secondary substations at year-end (no.) 413,887 411,404 2,483
Low-voltage lines at year-end (km) 740,979 736,026 4,953
Satellite centers at year-end (no.) 483 495 (12)
(1)
Electricity transported on Enel network (millions of kWh) 255,038 251,045 3,993
(1) Including 1,472 million kWh of electricity wheeled in previous years but commercially recognized in 2005.
The size of the electricity distribution network shows no significant change with respect
to December 31, 2005. The electricity transported shows an increase of 1.6%, which
reflects the growth of the domestic market. Excluding electricity transported in previous
years but commercially recognized in 2005 (about 1.5 TWh), the increase would be
about 2.2%.
77
Gas distribution and transport networks
2006 2005 2006-2005
Gas transported (millions of cubic meters)

- for Enel Group companies 3,252 3,613 (361)
- for non-Enel Group companies 412 333 79
Total gas transported 3,664 3,946 (282)
Network at year-end (km) 31,113 29,869 1,244
The decrease in gas transported of around 7.1% with respect to the previous year is
related to the decrease in volumes sold owing to the developments described in the
comments on the Domestic Sales Division.
Revenues in 2006 totaled €5,707 million, an increase of €175 million compared with
2005 (up 3.2%) due to the following factors:
a €190 million increase in revenues from the electricity network, essentially consisting
of higher revenues of €124 million from electricity transport, which reflects the greater
volumes of electricity transported, and €79 million in bonuses for service continuity.
The increases were partially offset by a decline of €17 million in connection fees;
a €15 million reduction in revenues from the gas distribution network, reflecting a
fall of €9 million in volumes transported and the effect of the recognition in 2005 of
non-recurring income of €10 million.
The gross operating margin came to €3,418 million, an increase of €20 million
attributable to:
a €50 million increase in the performance of the electricity network, essentially due
to the improvement in the electricity margin (€104 million), higher net bonuses for
service continuity and a reduction in operating costs. The increases were partly
offset by higher charges of €252 million to cover early retirement incentives and a
decline of €17 million in connection fees;
a €30 million decrease in the margin from the gas distribution network mainly
attributable to the reduction in volumes transported, the recognition of non-recurring
revenues in 2005 (a reduction of €10 million) and a rise in personnel costs in
connection with the early termination of employment contracts.
Operating income, net of depreciation, amortization and impairment losses totaling

€829 million (€770 million the previous year), amounted to €2,589 million, a reduction
of €39 million compared with 2005 (down 1.5%).
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Capital expenditure
Millions of euro
2006 2005 2006-2005
Investments in electricity distribution networks 1,200 1,319 (119) -9.0%

Investments in gas distribution networks 88 70 18 25.7%
Other investments in property, plant and equipment 93 100 (7) -7.0%
Investments in intangible assets 78 81 (3) -3.7%
Total 1,459 1,570 (111) -7.1%
Capital expenditure fell by €111 million, due essentially to a decline in investments in

the low-voltage distribution network as a result of the gradual completion of the digital
metering project.
79
International
All resources used in international activities relating to the production, distribution and
sale of electricity and gas are concentrated in the International Division.
The chief geographical areas of operation are:
the Iberian peninsula, where the Division is engaged in power generation (Enel
Viesgo Generación and Enel Unión Fenosa Renovables), power distribution and
sales, and support services (Electra de Viesgo Distribución, Enel Viesgo Energía
and Enel Viesgo Servicios) in Spain;
Central Europe, where it is engaged in power generation in Slovakia (Slovenské
elektrárne) and wind-power development (Erelis) in France;
South-eastern Europe, where it is active in generation and support services in
Bulgaria (Enel Maritza East 3 and Enel Operations Bulgaria) and power distribution,
sales and support services in Romania (Enel Electrica Banat, Enel Electrica Dobrogea
and Enel Servicii);
Russia, with energy trading and sales (RusEnergoSbyt) and generation plant operation
(ESN Energo) in the Russian Federation;
the Americas, where it is engaged in generating power from renewable resources
(Enel North America, Enel Latin America and Enel Panama).
Spain
Royal Decree Law no. 3/2006

On February 28, 2006, Law Decree no. 3/2006 was published. It seeks to reduce the
Spanish rates deficit through two measures:
an obligation for bilateral contracting between power generators and distributors of
the same group at a regulated price of €42.35/MWh;
the deduction from generation remuneration, for volumes corresponding to sales of
electricity on the pool market, of the value of emission rights allocated free of
charge in the national plan for the period 2005-2007.
The Decree was approved by Parliament and came into force on March 2, 2006. To
date, however, only the obligation for intragroup contracting has been applied, while
application of the deduction of CO2 rights is awaiting more detailed regulations.
80
Royal Decree Law no. 7/2006
On June 23, 2006, the Spanish Government approved a decree law reforming certain
important aspects of the Spanish electricity market, including:
the abolition of stranded costs (Costes de Transición à la Competencia, or CTC):
the CTCs, introduced by Spanish Law 54/1997, have been acknowledged to be
both inefficient and superfluous. Inefficient, in that they distort the offers made to
the pool market; superfluous, in that the high market prices have already enabled
recovery of the costs of market liberalization;
rates deficit: the 2% limit on the annual increase in the average reference rate has
been abolished;
new incentives for the use of domestic coal: the Spanish Government can now
establish incentives of up to €10/MWh over an indefinite time period, compared with
the current €6/MWh, which was only guaranteed through 2007;
incentives for generation from renewable resources: payment of an incentive that
increases independently from that of the reference rate.
Royal Decree Law 809/2006
On June 30, 2006, the Spanish Government increased the rate for industrial customers
by 6% in order to recover a portion of the 2005 deficit, which is considered as a system
cost and, as such, to be financed through rates of the next 14 years.
As from July 2007, it will be mandatory for new users to install meters that allow for the
application of hourly rates and remote metering. The Government will also develop a
plan for replacing old meters at the national level.
Antitrust proceedings
On November 8, 2004, the Spanish antitrust authority, Servicio de Defensa de la
Competencia (SDC), in response to a report filed by the Comisión Nacional de Energía
(CNE), opened antitrust proceedings against Enel Viesgo Generación for alleged
abuse of a dominant position in the technical restraints market in 2002 and in the first
few months of 2003. In January 2005, the inquiry was extended to all of 2003.
On October 5, 2005, the results of the inquiry were reported, and on November 3,
2005, the SDC brought the case to the Spanish antitrust court, Tribunal de Defensa de
la Competencia (TDC). On December 28, 2006, the TDC concluded its deliberations
and imposed a fine of €2.5 million on Enel Viesgo Generación. The court further
ordered the company to desist from the conduct for which it had been sanctioned. Enel
Viesgo Generación appealed against the sentence to the Audiencia Nacional (the
Spanish high court) and requested a precautionary suspension of the fine.
81
On May 8, 2005, the SDC initiated a second investigation of Enel Viesgo Generación
for alleged abuse of a dominant position in the technical restraints market. The
proceedings, where are in response to a complaint filed by another operator, regard the
period from mid-2004 through the first part of 2005. The other operator has also
petitioned the TDC to extend the period under investigation to include all of 2005.
Emissions trading
In Spain, the plants of Enel Viesgo Generación have been allocated emissions
allowances of 3.9 million metric tons for 2005, 3.4 million metric tons for 2006 and 2.7
million metric tons for 2007. Actual emissions exceeded these allowances by 2.1
million metric tons in 2005 and 0.7 million metric tons in 2006. In order to cover the
deficit, Enel Viesgo Generación has turned to the spot market for 3.1 million metric
tons, slightly more than the shortfall, thereby closing the year with an allowance
inventory of 0.3 million metric tons.
In that regard, Spain’s Royal Decree Law 3/2006 also calls for the deduction from the
generation remuneration component of a portion of the emission rights allocated free of
charge by the national plan for 2006. Issuance of the related detailed regulations is still
pending.
Spain’s allocation plan for 2008-2012 was approved by the Government with a Royal
Decree of November 24, 2006: the plan allocates emissions allowances equal to 3.2
million metric tons a year to Enel Viesgo Generación.
Slovakia
The New Decommissioning Fund Act (Law 238 of March 16, 2006)
On April 26, 2006, the Slovakian Government published Law 238, which sets out new
criteria for the establishment and management of the fund for the decommissioning of
nuclear power plants and the management of related waste. More specifically:
the law recognizes and details a shortfall in the fund that had accumulated through
the date on which the law went into effect. The law calls for this shortfall to be
covered by a levy to be applied to all electricity consumers. The amount of this levy
is not specified in the law;
for the contributions subsequent to July 1, 2006, the fund is to be financed by the
operators of the nuclear power plants. The size of the contributions is to be set in
accordance with a two-part mechanism, with an annual fixed component in the
amount of about €9,000 per MW of nuclear power output and a variable component
equal to 5.95% (6.8% for the period from July 1 to December 31, 2006) of revenues
from the sale of electricity generated by nuclear power plants;
82
the law also establishes that, for the 2007-2011 period, the total annual contribution
to the fund by Slovenské elektrárne (SE) will in no event exceed €48 million.
In early June, the Slovakian Government appointed the members of the fund’s board of
trustees, the fund’s top administrative body.
The must-run plants of Slovenské elektrárne (SE)
Slovenské elektrárne (SE) owns two thermal plants that, in compliance with the
“general economic interest” clause of the new Slovakian Energy Act (Law 658/2004),
are required to guarantee availability of capacity and electricity.
The law states that SE is to be compensated for costs, incurred for the operation of
these plants, that cannot be recovered through the sale of electricity on the market,
through a system costs (SC) rate component levied on all final consumers. This rate
component is set annually by the Slovakian regulator (URSO) based on the expected
extra costs to be paid to SE.
The URSO set the reimbursement for the two must-run plants (ENO and EVO) at a
total of SKK 2.2 billion (equal to about €59 million) for 2005 and, with its Decisions nos.
9/2006/E, 150/2006 and 290/2006, set the compensation for 2006 at a total of SKK 2.7
billion (equal to about €72 million). With reference to the confirmed final results, SE
feels that the amount for 2005 is insufficient, and, in May 2006, filed a formal request
for an additional reimbursement from URSO and obtained an additional amount of SKK
0.7 billion (around €18 million).
Proposed amendments to the Regulatory Act and the Energy Act
On October 5, 2006 the Slovakian Ministry for the Economy published a proposal for
changes to the Slovakian Regulatory Act, which established the Slovakian regulator
URSO and the Energy Act. The draft was published for consultation; it includes
important changes to the laws relating to powers for the regulation of generation prices
and wholesale selling.
SE has submitted its own observations, which criticize the substance of the new
proposals in the draft.
Emissions trading
For 2006, Slovenské elektrárne was allocated emissions allowances for 5.3 million metric
tons, while actual emissions were about 0.6 million metric tons less.
As regards the 2008-2012 allocation plan, Slovenské elektrárne was allocated allowances
equal to an annual average of 9.2 million metric tons of CO2 out of a total of 41.3 million
metric tons. With Communication COM(2006) 725 of November 29, 2006, the European
Commission imposed a 25% reduction in the cap on total emission allowances. The
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Slovakian Government must now revise its plan and redistribute the allocation among
the plants in the different sectors.
Romania
Rate issues
Distribution rates are established with a system that regulates rates for end users while
safeguarding the profits of distributors, covering distribution costs within the limits of a
price cap. Rate increases are subject to a cap of 18% in real terms. The regulatory
period lasts five years, with the exception of the first, which is three years (2005-2007).
For 2006, the recognition of costs submitted in accordance with the system led to a real
rate increase of 18% for Enel Electrica Banat and 16.9% for Enel Electrica Dobrogea.
Unbundling
By July 2007, electricity distribution and sales companies are required to implement
corporate unbundling. Regulations require the creation of separate companies for
distribution network operation and sales, and, consequently, separate administration,
accounting and management.
Certain aspects of the unbundling have yet to be settled, such as the structure of the
“default supplier” (i.e. the supplier of customers of the regulated market who, after July
2007, do not exercise the right to choose their supplier) and the supplier of last resort
(which steps in the event of the bankruptcy of the default supplier) of customers on the
regulated market who, after July 2007, do not exercise the right to choose their
supplier.
The default supplier role will be performed by the same electricity distribution/sale
companies. To date, however, the procedures for the purchase of electricity for
customers who remain in the regulated market have yet to be defined. Discussions are
also under way with the Authority for the recognition of unbundling costs.
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Operating performance of the International Division
Millions of euro
2006 2005 2006-2005
Revenues 3,068 1,858 1,210

Depreciation, amortization and impairment losses 399 178 221
Operating income 519 307 212
Operating assets 10,008 4,282 5,726

Operating liabilities 4,037 813 3,224
Employees at year-end (no.) 13,861 5,024 8,837
The following table breaks down results by geographical area:
Millions of euro Revenues Gross operating margin Operating income

2006 2005 2006-2005 2006 2005 2006-2005 2006 2005 2006-2005
Iberian peninsula 1,049 1,289 (240) 235 284 (49) 110 143 (33)
Central Europe 975 - 975 389 - 389 198 - 198
South-eastern Europe 670 452 218 180 128 52 127 112 15
Russia 202 2 200 7 1 6 7 1 6
Americas 172 115 57 107 72 35 77 51 26
Total 3,068 1,858 1,210 918 485 433 519 307 212
Net electricity generation
Millions of kWh
2006 2005 2006-2005
Thermal 9,640 9,324 316 3.4%

Nuclear 10,692 - 10,692 -
Hydroelectric 6,011 2,887 3,124 108.2%
Wind 846 957 (111) -11.6%
Other resources 327 457 (130) -28.5%
Total net generation 27,516 13,625 13,891 102.0%
Net generation abroad in 2006 totaled 27,516 million kWh, an increase of 13,891
million kWh compared with 2005, attributable primarily to the consolidation of
Slovenské elektrárne (15,618 million kWh), which mainly contributes with nuclear
power generation (10,692 million kWh). The increase was partly offset by a decrease in
net generation in Spain (2,336 million kWh of mainly thermal generation).
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Contribution to gross thermal generation
Millions of kWh
2006 2005 2006-2005
High-sulfur fuel oil (S>0.25%) 148 0.7% 622 6.1% (474) -76.2%
Natural gas 129 0.6% 483 4.7% (354) -73.3%
Coal 10,578 47.0% 9,172 89.2% 1,406 15.3%
Nuclear fuel 11,633 51.7% - - 11,633 -
Total 22,488 100.0% 10,277 100.0% 12,211 118.8%
As regards the mix of fuels used for thermal generation, the proportion of the various
fuels used for gross thermal generation in 2006 was greatly influenced by the use of
nuclear fuel following the inclusion of Slovenské elektrárne in the scope of
consolidation. The increased use of coal and the reduced use of other fuels also reflect
the factors already mentioned regarding net generation.
Enel’s net efficient generation capacity abroad
MW
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Thermal plants 3,740 2,141 1,599

Hydroelectric plants 3,772 1,159 2,613
Wind plants 283 412 (129)
Nuclear plants 2,460 - 2,460
Alternative energy resources 46 74 (28)
(1)
Total 10,301 3,786 6,515
(1) Of which 1,559 MW from Slovenské elektrárne subject to the carve out: EBO V1 nuclear plant for 820 MW and hydroelectric plants
for 739 MW (of which 720 MW from the Gabcikovo plant).
The net efficient generation capacity abroad increased by 6,515 MW in 2006, which
mainly reflects the addition to the scope of consolidation of Slovenské elektrárne, which
contributed 6,442 MW to the total, and of Enel Panama, which contributed 150 MW. In
addition to these, the total net efficient capacity of the plants of Enel Latin America
registered an increase of 123 MW, mainly in connection with the acquisition of
hydroelectric plants in Brazil. Capacity was reduced by 145 MW as a result of the
elimination of Enel Unión Fenosa Renovables from the scope of consolidation, which
also shows up in the lower figures for generation from alternative resources and wind
power.
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Electricity transport and distribution networks
2006 2005 2006-2005
High-voltage lines at year-end (km) 6,142 6,116 26

Primary transformer stations at year-end (no.) 300 299 1
Medium-voltage lines at year-end (km) 33,050 33,012 38

Secondary transformer stations at year-end (no.) 22,429 22,275 154
Low-voltage lines at year-end (km) 43,770 43,288 482
Satellite centers at year-end (no.) 193 149 44
Electricity transported on Enel distribution network (millions of kWh) 12,570 9,651 2,919
At December 31, 2006, the size of the electricity distribution network was substantially
unchanged with respect to the corresponding period of the previous year. Much of the
increase in the electricity transported is ascribable to the inclusion of the Romanian
companies in the scope of consolidation in the 2nd Quarter of 2005, which added 2,804
million kWh to the total.
Electricity sales
Millions of kWh
2006 2005 2006-2005
High-voltage 10,160 3,085 7,075 -

Medium-voltage 1,938 1,347 591 43.9%
Low-voltage 5,055 3,661 1,394 38.1%
Total 17,153 8,093 9,060 111.9%
Electricity sold by the International Division in 2006 increased by 9,060 million kWh, a
rise that is mainly attributable to the inclusion in the scope of consolidation of
RusEnergoSbyt (up 7.6 billion kWh) as of June 2006, and of the Romanian companies
(up 1.5 billion kWh) from the end of April 2005.
Operational performance
Revenues increased by €1,210 million (up 65.1%) in 2006, from €1,858 million to
€3,068 million. The increase is essentially due to the consolidation of Slovenské
elektrárne (€975 million) and RusEnergoSbyt (€199 million) in the 2nd Quarter, and
Enel Panama (€18 million) in the 3rd Quarter. Other factors contributing to the growth
in revenues include the acquisition, in the 2nd Quarter of 2005, of the two Romanian
firms involved in the sale and distribution of electricity (€166 million), higher revenues
of €52 million from the Bulgarian companies and growth in revenues of the American
companies of €39 million. The increases were partially offset by the reduction in
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revenues from the Spanish firms (down €240 million) related to lower energy sales and
the application, beginning in the first part of 2006, of regulations governing negotiations
between power generators and distributors within a single group.
The gross operating margin reached €918 million, an increase of €433 million (up
89.3%) over 2005. Of the total increase, €420 million is due to the change in the scope
of consolidation, of which €389 million attributable to Slovenské elektrárne, €19 million
to the Romanian companies, €6 million to RusEnergoSbyt and €6 million to Enel
Panama. Also contributing were increases at Enel Maritza East 3 (€33 million) and the
American companies (€29 million). The increase was partially offset by a reduction in
the margin posted by the Spanish companies (down €49 million), mainly attributable to
the lower volumes generated and the deconsolidation of 30% of Enel Unión Fenosa
Renovables.
Operating income came to €519 million, an increase of €212 million compared with
2005, most of which (€199 million) is attributable to the change in the scope of
consolidation for the period (€198 million for Slovenské elektrárne), as well as to the
growth in operating income achieved by the American companies (€23 million) and to
the Bulgarian companies (€23 million). These increases were partially offset by a €33
million loss at the Spanish companies.
Capital expenditure
Millions of euro
2006 2005 2006-2005
Generation plants:
- thermal 139 83 56 67.5%
- hydroelectric 27 28 (1) -3.6%
- geothermal 2 - 2 -
- nuclear 57 - 57 -
- alternative energy resources 84 111 (27) -24.3%
Total generation plants 309 222 87 39.2%
Investments in distribution networks 124 62 62 100.0%

Other investments in property, plant and equipment 11 6 5 83.3%
Investments in intangible assets 23 9 14 155.6%
TOTAL 467 299 168 56.2%
Capital expenditure amounted to €467 million, an increase of €168 million on the

previous year. In particular, the increase in investments in generation plants, equal to
€87 million, mainly reflects the consolidation of Slovenské elektrárne (€64 million, of
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which €57 million in the nuclear field), investments in America by Enel North America
and Enel Latin America amounting to €45 million, as well as an increase of €44 million
in Spain (regarding in particular the transformation of the Escatrón plant to combined-
cycle technology). These developments were partially offset by the decrease in capital
expenditure following the proportionate consolidation of Enel Unión Fenosa
Renovables (a reduction of €61 million), which mainly affected plants using alternative
energy resources.
The increase in spending on distribution networks abroad, equal to €62 million, mainly
reflects the increase in investment in Romania (€55 million) and Spain (€9 million).
89
Parent Company and Other Activities
Millions of euro
2006 2005 2006-2005
Parent Company
Revenues 1,178 1,118 60
Net income/(charges) from commodity risk management (4) (14) 10
Income from equity exchange transaction 263 - 263
Operating income 423 53 370
Operating assets 1,013 1,263 (250)

Operating liabilities 1,275 1,604 (329)
Employees at year-end (no.) 652 569 83
Services and Other Activities

Revenues 1,161 1,741 (580)
Operating assets 1,771 2,945 (1,174)

Operating liabilities 1,128 2,392 (1,264)
Employees at year-end (no.) 4,585 5,416 (831)
Capital expenditure 71 98 (27)
Parent Company
In its capacity as an industrial holding company, Enel SpA defines strategic targets for
the Group and coordinates activities of subsidiaries.
In addition, Enel SpA manages central treasury operations and insurance risk
coverage, providing assistance and guidelines on organization, personnel management
and labor relations, accounting, administrative, fiscal, legal, and corporate matters.
Moreover, Enel retains title to long-term electricity import contracts.
Revenues came to €1,178 million in 2006, up €60 million or 5.4% compared with 2005.
The increase is primarily attributable to the growth in revenues from the sale of
electricity, mainly due to higher sales prices (€27 million), and the release to the
income statement of the gain recognized in equity in 2005 (€23 million) resulting from
the fair value measurement of the Terna bonus shares, the rights to which were
exercised in January 2006.
The gross operating margin in 2006 amounted to €177 million, an increase of €110
million on 2005 that is mainly attributable to the improvement in the margin on electricity
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sales (€38 million) and the income associated with the Terna bonus shares. These
factors also combined with a reduction in operating costs, which was primarily related
to lower provisions for disputes and litigation compared with 2005 (€45 million).
Operating income came to €423 million, an increase of €370 million over the previous
year (€53 million), due both to the improvement in the gross operating margin and to
the recognition of the income related to the Wind-Weather share exchange, partially
offset by increased depreciation, amortization and impairment losses (€3 million).
Services and Other Activities

The Services and Other Activities area provides competitive services to the various
Enel Group companies. The area includes real estate and facility services, IT services,
personnel training and administration, administrative services, factoring and insurance
services.
For the purposes of comparison, it should be noted that on April 1, 2005, Enel Ape
(now Enel Servizi) acquired the “Administration” units of the Parent Company, Enel
Distribuzione and Enel Produzione, and on July 1, 2005 the Group companies
transferred their “Services” units to Enel Servizi. In addition, the Enelpower unit
involved in engineering and construction activities for Group power plants was acquired
by Enel Produzione on January 1, 2006.
Revenues for the Services and Other Activities area came to €1,161 million in 2006,
compared with €1,741 million in 2005 (down 33.3%). This decline of €580 million is
essentially the result of the transfer to Enel Produzione of the engineering and
construction unit (€694 million), which was partially offset by higher revenues for staff
services thanks to its acquisitions of these business units in the 2nd and 3rd Quarters
of 2005 (€115 million).
The gross operating margin in 2006 came to €179 million, down €136 million or
43.2% compared with 2005, largely as the result of the reduction in engineering and
construction activities (€103 million) and increased early retirement incentives (€32
million).
Operating income amounted to €86 million in 2006, down €133 million compared with
2005.
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Outlook
In an increasingly competitive environment and ever greater attention to environmental

issues, in 2007 Enel intends to improve upon the excellent results achieved last year.
In the domestic market, Enel has already developed its strategies for the liberalization
of the retail market, and is taking steps to consolidate its position with targeted service
plans for customers in the free market.
In additional, in line with the goal of strengthening its leadership position in renewables,
Enel’s Environment and Innovation Project sets out its investment plans and initiatives
to promote research and development in this sector, as well as new products and
services to encourage the environmentally friendly use of energy by customers.
As regards efficiency, work continues on the completion of the conversion of plants to

coal, the implementation of strategies to optimize fuel sourcing and measures to
optimize service costs and network management. In particular, Enel has implemented
new initiatives to achieve operational excellence through its Project Zenith, which
involves all Divisions and is expected to begin generating significant cost savings
already this year.
With its significant acquisitions abroad in 2006, Enel confirmed its international
expansion strategy. In early 2007, with the acquisition of a stake in Endesa and the key
agreements reached first with Acciona on the joint management of Endesa and then
with E.On on the withdrawal of its tender for Endesa in exchange for the transfer of a
number of assets, Enel took a significant step towards the creation of a major
European energy group with a substantial presence in Spain and the rest of the world.
The effects of these activities will modify the financial situation of Enel that will maintain
the economic and financial balance, the capacity and the resources to face these future
commitments.
The projects under way, the planned activities in the various sectors of Enel’s business,
and the growth in international activities will also have a positive impact in 2007, with
operating results expected to improve even further.
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Research and development
The Enel Group conducts competitive research aimed at increasing the

competitiveness of generation plants by improving operating performance and
compatibility with environmental policy. Research spending incurred in 2006 came to
about €22 million, which is essentially in line with the figure for 2005 (€20 million).
“System research”, conducted for the benefit of all actors in the Italian electrical
system, governed by regulations concerning the reorganization of the electrical
industry, and remunerated through a specific rate component, is conducted by the
associated company Cesi, in which the Enel Group held a 25.92% stake as of
December 31, 2006.
In 2006, competitive research continued to concentrate on the various aspects of

electricity generation, and in particular:
development activities continued for the gas turbine diagnostics system, and efforts
have begun on the development of the specific early diagnostics system for gas
turbine and steam cycle anomalies for the Santa Barbara plant, which entered
service in the 2nd Half of 2006;
research activities have continued on the optimization of combustion in oil and coal-
fired facilities of Enel Produzione. More specifically, the training simulator for the
analysis of the dynamic behavior of the fluidized bed boiler and of the thermal cycle
of the Sulcis plant is now being completed, and, with regard to the coal combustion
systems of the Brindisi Sud thermoelectric plant, testing has begun in order to verify
the behavior and performance of three different burners;
in the area of emissions control, the activities begun in 2005 have continued with
regard to the control of mercury with the start of the La Spezia pilot circuit and the
development of the pollutant measurement technique for coal flue gas at the
Marghera industrial pilot plant. Work on the online emissions database software
has also begun. The purpose of this software is to provide an assessment of the
impact of fuel on the pollution abatement systems and on stack emissions. Finally,
work has continued on achieving “zero emissions” in geothermal operations, as well
as the work that began in 2005 for the development of a method of assessing the
contribution of coal-fired plants to the quantity of particulates in the atmosphere;
the guidelines have been established for the plant implementation of a system of
quality control and CE labeling of the light ash to be used in creating structural
concrete. Efforts have also continued to optimize operations aimed at reusing
fluidized bed ash. In addition, upon the conclusion of the “CENERI DOC” project
financed by the Italian Ministry of Education, Universities and Research, the main
93
results of the tests conducted on technologies to reduce the amount of material in
ash that is not fully combusted and on the processes of producing and using fly ash
were presented;
within the scope of the Dynamis project, financed by the European Unión, a model
has been developed to simulate coal gasification cycles coupled with systems that
make it possible to subsequently separate the carbon dioxide produced, while also
developing a model to simulate a low-temperature coal oxidation process with the
separation of liquid carbon dioxide;
activities have continued on the development of an advanced 12 MW hydrogen-
powered thermoelectric unit to be located at the Fusina plant. The plant will run on
the hydrogen currently available at the Marghera petrochemical center. In 2006, the
hydrogen gas turbine was ordered, and the detailed engineering has begun. An
order has also been issued to upgrade the Sesta test station in order to be able to
conduct the full range of tests on hydrogen-fired combustors. Within the scope of
the project financed by Fondo Integrativo Speciale per la Ricerca (FISR), work has
begun to implement the changes to the pyrolysis (biomass) plant at Bastardo.
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Human resources and organization
Organization
In the course of 2006, Enel continued to work towards the consolidation and
development of its divisional structure to support the Company in view of the opening
of the domestic market and the ongoing process of international expansion.
This is the context that saw the launch of the new structure of the Domestic Sales
Division, with a Marketing unit devoted to market analysis and product development, as
well as Sales units segmented by customer category. The reorganization of the
Division with a view to integrating gas and electricity customers also involved the start
of a process of corporate restructuring.
The reorganization of the Generation and Energy Management Division was

completed. Its new structure includes business areas devoted to thermal and
renewables generation, a single Energy Management business area responsible for
planning generation and the sourcing and trading of fuel and electricity, and technical
areas in charge of developing and building power plants, developing nuclear power
skills and research.
The Domestic Infrastructure and Networks Division also underwent reorganization in

2006, which led to the creation of central “technical functions” focused on the synergies
between the electricity and gas sectors in terms of know-how, core skills, best practices
and information systems.
An Operations and Integration Department was created within the International Division
to support business development processes in evaluating foreign acquisition targets
and integrating those acquired.
At the Corporate level, the process of centralizing staff activities was completed, with
the formation of a single central unit for corporate secretariat activities for Italy.
To increase control over the strategic processes in the Institutional and Regulatory
Affairs Department, renamed the Regulatory Affairs and Corporate Strategy
Department, Corporate Strategy units were created to coordinate strategy
development. A Large Infrastructure Projects Unit was also set up to manage the
megacommunities supporting the implementation of major infrastructure projects.
95
In 2006, the process of reorganizing the Information and Communication Technology
Department was also implemented. The aim is to tighten the link between ICT
development activities and the Company’s business, and increase the operational
effectiveness of ICT processes through the establishment of a single position of
responsibility to oversee products/services. The ultimate aim is to set up an end-to-end
system stretching from the formalization of internal customer needs to the development
of new applications within the framework of robust and centralized corporate
governance arrangements.
The entire Company underwent a far-reaching review of governance and operational

processes in 2006 with a view to assessing and mitigating the risks associated with the
reliability and accuracy of corporate reporting. The resulting control system and the
process documentation that describes the system are now an integral part of the body
of corporate procedures.
Development and training

The human development and training initiatives of 2006 were aimed at achieving
excellence in core skills, at managing internal growth effectively and at ensuring
resources were available to fill key positions.
The main development initiatives relate to the development and progressive extension
to foreign companies of specific assessment campaigns for personnel categories, a
Group succession plan to ensure all key positions are filled, and an initial “climate
survey” for all members of staff, to appraise the working environment in Enel.
In 2007, Enel will introduce a new performance appraisal system for top and middle
management, and specially-tailored development projects for talented resources at
various levels of the organization. It also plans to pursue a policy of extensive job
rotation, especially at the international level, and will take steps to improve the working
environment on the basis of the findings of the climate survey taken in 2006.
As regards training, the main areas of interest have been courses to develop and
strengthen the executive skills of management-level staff, and institutional training
aimed at inculcating a sense of identification with the culture and values of Enel and at
expanding/consolidating a set of shared skills (interfunctional knowledge and skills).
Enel also established specialized divisional training, particularly the Domestic Sales
Division, the aim of which is to develop specific technical know-how and core skills to
give personnel the necessary knowledge to manage change processes.
In 2007, Enel plans to overhaul its institutional programs, in line with its talent
management policies. Enel also plans to extend specific development streams for
professional areas to encompass all critical functions, and launch several specific
initiatives to support the ongoing process of change (international expansion and
96
market orientation). The activities planned for 2007 will receive an additional impetus
from the upcoming establishment of “Enel University”.
Hiring
Personnel selection within Enel aims at ensuring the compliance of candidates
selected with the requirements of the job profiles in the various entry-level positions
through the hiring of dynamic young talents who can be developed within the
Company, and at creating the conditions to enhance Enel’s appeal to the upper
segments of the Italian and international labor market.
In 2006, Enel hired more than 1,000 people. In Italy, hirings totaled about 500 people,
of whom 56% were young secondary school and university graduates, with the
intention of strengthening the core business functions (engineering, plants, energy
management in the Domestic Generation and Energy Management Division, the sales
and marketing areas of the Domestic Sales Division, and the technical areas of the
Domestic Infrastructure and Networks Division) as well as ICT and staff functions
(especially the governance units). The technical and management structure of the
International Division was also strengthened with the addition of specialized personnel
and young graduates seeking international careers. Particular attention was given to
the creation of a pool of skills in nuclear technology, which entailed the hiring of 17
people.
During 2006, various exchanges were organized between Enel and international
universities, institutions and companies operating in the energy sector, in regions of
strategic interest to the Company. The exchanges helped boost Enel’s national and
international reputation as a center of excellence for energy and sustainable
development.
In 2007, Enel plans to continue with the intense recruitment and hiring program begun
in 2006 with the aim of strengthening the technical and engineering structures of the
Domestic Generation and Energy Management Division and the Domestic
Infrastructure and Networks Division, as well as the sales and marketing areas of the
Domestic Sales Division and the International Division.
Compensation and incentive systems

Compensation policy in 2006 was focused on increasing the integration between
processes of compensation and assessment, and saw an increase in use of variable
retribution based on performance in the Company. In the area of short-term incentives,
the Company reaffirmed management by objective (MBO) as its main tool (which
involves around 93% of senior management and 13% of middle management), along
with a special incentive system for sales personnel. With regard to medium to long-
term incentives, a stock options plan was again implemented in 2006, involving about
97
88% of senior management. In line with the policies of recent years, 2007 will see a
further intensification of the practice of customizing compensation tools for the most
critical professional families, including the adoption of “total rewarding” approaches.
Labor relations
Electricity area
The most significant result in 2006 was the renewal of the work rules part of the
national collective bargaining agreement for the electricity industry for the period 2005-
2009, and the updating of the economic part of the agreement for the period 2005-
2007, which the Company signed with the trade unions on July 18 after intensive
negotiations. The renewal of the contract paved the way to the introduction of modern
and flexible labor practices, especially in some areas such as working hours and the
new structure of the labor market (types of contract, job security, etc.). October saw the
establishment and start of activities of the bilateral committees envisaged in the labor
agreement to deal with a series of “deferred commitments” relating to supplementary
pensions, personnel classification, rules for industrial action and collation of the text of
the agreement.
At the company level, in 2006 an agreement was signed for the allocation of
performance bonuses for the period 2006-2007, and work was completed on the
implementation of the divisional organization, with the transfer of processes and
resources to Enel Servizi and the rationalization of the Domestic Generation and
Energy Management Division following the transfer of engineering and construction
operations for Group projects from Enelpower to Enel Produzione. Discussions over
the creation of a Personnel Services Center, a Purchasing Area and the reorganization
of the Domestic Sales Division were concluded during the year.
Gas area
In the gas area, in addition to the corporate rationalization process mentioned above in
relation to Enel Gas (now Enel Energia), work was completed transferring assets and
staff resources – the ICT and Administration units of Enel Rete Gas and Enel Gas – to
Enel Servizi with effect from January 1, 2007, in compliance with the procedures set
out in Article 47 of Law 428/90.
As regards the industry as a whole, intensive negotiations took place over the renewal
of the national collective bargaining agreement for the gas and water industries (which
expired on December 31, 2005).
On May 12, an agreement was reached with the founders of the executive
complementary pension fund (Enel and Cordenel/Federmanager), which called for an
increase in the contributions for the members.
98
Staffing levels
As of 31 December 2006, the Enel Group employed a total of 58,548 people.
This increase in the Group’s workforce was due to the acquisition of foreign companies
(Slovenské elektrárne and its subsidiaries, Enel Operations Bulgaria, and
RusEnergoSbyt). The balance of new hires and terminations of employment (a
decrease of 2,369 employees) is in line with developments in previous years.
Changes in the total number of employees with respect to December 31, 2005 are
summarized in the table that follows.
Employees at Dec. 31, 2005 51,778
Changes in the scope of consolidation:

- Simeo 24
- Slovenské elektrárne group 7,599
- Enel Operations Bulgaria 1,004
(1)
- RusEnergoSbyt 389
- Enel Brasil Partecipações 101
- Enel Panama 72
- Metansicula 17
- Erelis 11
(2)
- sale of 30% of Enel Unión Fenosa Renovables (20)
- sale of business unit (to Hera) (42)
- sale of Carbones Colombianos del Cerrejón (16)
9,139
Hirings 1,015
Terminations of employment (3,384)
Employees at Dec. 31, 2005 58,548
(1) Equal to 49.5% of the total workforce; also includes the acquisition of new branches in 2006.
(2) Following proportionate consolidation after the sale of 30%.
At December 31, 2006, the number of foreign-based employees was 13,958.
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Stock option plans
Since 2000 the Enel has implemented stock option plans each year in order to give the
Enel Group – in line with international business practice and the leading Italian listed
companies – a means for fostering management motivation and loyalty, strengthening
a sense of corporate belonging in our key personnel, and ensuring their enduring and
constant effort to create value, thus creating a convergence of interests between
shareholders and management.
The remainder of this section describes the features of the stock option plans adopted
by Enel and still in place in 2006.
2002 plan
In May 2001, accepting the proposals made by the Board of Directors (in consideration
of the insufficiency of the remaining capital increase authorized by the shareholders in
December 1999 to implement additional stock option plans to those adopted in 2000
and 2001), an extraordinary meeting of Enel’s shareholders initiated a new stock option
plan, resolving:
to revoke, with regard to the part not yet exercised by the Board of Directors, the
enabling authority to increase the share capital granted in December 1999, while
confirming all the acts carried out in the exercise of this power;
to again grant the Board of Directors the authority for five years to increase share
capital by a maximum of €60,630,750 (slightly less than 1% of capital at the time)
through the issue of 60,630,750 ordinary shares with a par value of €1.00 each,
bearing full dividend rights, to be offered for subscription against payment to
executives – to be selected by the Board of Directors – of Enel itself and/or its
subsidiaries, with the consequent exclusion of the preemptive rights pursuant to the
Civil Code and the Consolidated Law on Financial Intermediation.
In carrying out this mandate from the shareholders, in March 2002 the Board of
Directors approved the stock option plan for 2002 (supplemented in September of the
same year), together with the Regulations for implementing it. The Regulations
provided for the executives selected by the Board of Directors to be granted personal
rights, non-transferable inter vivos (options), to subscribe a corresponding number of
newly issued ordinary Enel shares. As established by the Board of Directors, the
executives were divided into different brackets and the number of options granted to
those in each bracket was determined by applying a multiplier to the ratio between the
reference gross annual compensation of the bracket concerned and the value of a
three-year option, determined on the basis of its market valuation. The right to
100
subscribe the shares is subordinated to the condition that the executives concerned
remain employed within the Group, with a few exceptions (such as, for example,
termination of employment because of retirement or permanent invalidity, exit from the
Group of the company at which the executive is employed, and succession) specifically
governed by the Regulations.
The beneficiaries of the 2002 stock option plan also included those persons who had
held, at different times, the position of Enel’s Chief Executive Officer during that year, in
their capacity as General Manager.
The Regulations also established that the options granted – in the event the conditions
of exercise were met – would be exercisable as follows: 30% as from the first year
following the one in which they were granted, an additional 30% as from the second
year subsequent to the one in which they were granted, and the remaining 40% as
from the third year following the one in which they were granted, with the requirement
that the deadline for exercising all the options is the fifth year following that in which
they were granted.
In any event, the options are exercisable each year only during three time windows of
fifteen trading days on the Italian Stock Exchange following: (i) the Board of Directors’
examination of the preliminary consolidated data, (ii) the Annual General Meeting’s
approval of the financial statements of Enel SpA, and (iii) the Board of Directors’
approval of the third-quarter report.
With regard to conditions of exercise – suspensory in nature – the Regulations
establish that all the options granted would become exercisable in the event that (i)
Group EBITDA for the year in which the options were granted as estimated in the
budget approved by the Board of Directors is exceeded and (ii) the percentage change
in the price of Enel shares recorded on Borsa Italiana’s electronic stock exchange
during the year in which the options were granted was greater – according to the
calculation criteria set out in the Regulations – than the performance of a specific
reference index, determined by the Regulations as the average of the MIBTEL index
(weighting: 50%) and the FTSE Eurotop 300 Electricity index (weighting: 50%). If both
objectives are not jointly achieved, all the options automatically lapse, there being no
provision for a mechanism allowing them to be recovered.
The Regulations established that the strike price of the shares was to be determined by
the Board of Directors as no less than the arithmetic average of the reference prices of
Enel shares on Borsa Italiana SpA’s electronic stock exchange during the period
between the date on which the options were granted and the same day of the
preceding solar month. Subscription of the shares at the strike price is to be charged
entirely to the beneficiaries, as the plan does not provide for any facilitated terms to be
granted in this respect.
101
Developments in the 2002 stock option plan
Under the Regulations, the 2002 stock option plan involved the granting of a total of
41,748,500 options to 383 Group executives at a strike price of €6.426 (€6.480 for the
options granted in September 2002). The review conducted by the Board of Directors
to verify satisfaction of the conditions of exercise ascertained that during the year in
which the options were granted both objectives – surpassing Group EBITDA and the
performance of Enel’s shares with respect to the benchmark – were achieved, enabling
exercise of all the options. Because of the early termination of employment of the
related grantees, of the 41,748,500 options that were granted and became exercisable
(i) 4,872,500 lapsed in the period between the date of granting of the options and the
end of 2005 and (ii) no options lapsed during 2006.
Capital increase to serve the 2002 stock option plan

As a consequence of the foregoing, in April 2003 the Board of Directors, in partial
execution of the enabling authority granted it by the Extraordinary Shareholders’
Meeting held in May 2001, approved a divisible capital increase (representing a
maximum potential dilution of less than 0.7% of capital at the time) to serve the options
granted with the stock option plan for 2002.
Specifically, on this occasion the Board of Directors approved a capital increase of a
maximum of €41,748,500, to be subscribed by December 31, 2007, serving all the
options granted under the 2002 plan (which had become exercisable), at a strike price
amounting to (i) €6.426 for the 39,245,000 options granted in March 2002 and (ii)
€6.480 for the 2,503,500 options granted in September 2002.
In execution of the Board resolution, in 2006 a total of 1,319,050 ordinary shares were
issued and subscribed to serve the stock options for the 2002 plan exercised between
February 2 and February 22, 2006, May 29 and June 16, 2006 and November 10 and
November 30, 2006. They add to the 34,801,650 ordinary shares issued and subscribed
serving the same number of stock options under the 2002 plan exercised in 2004 and
2005.
2003 plan
In May 2003, accepting the proposals made by the Board of Directors (in consideration
of the insufficiency of the residual amount of the preceding authorization, granted by the
shareholders in May 2001, to establish additional stock option plans) an extraordinary
meeting of Enel’s shareholders initiated a new stock option plan, resolving:
to revoke, with regard to the part not yet exercised by the Board of Directors, the
enabling authority to increase share capital granted in May 2001, while confirming
all the acts carried out in the exercise of this power;
102
to grant the Board of Directors new authority to increase share capital by a
maximum of €47,624,005 (about 0.8% of capital at the time), endowed with the
same characteristics as the authority granted in May 2001 and to be used to serve
the stock option plan for 2003, as already approved by the Board of Directors in
April 2003.
The 2003 plan – whose beneficiaries include Enel’s Chief Executive Officer in his
capacity as General Manager – is founded on the same rationale as the 2002 plan,
following the provisions of the implementing Regulations with regard to the various
features of the plan described earlier (specifically, the criteria that govern both the
granting of the options to the beneficiaries of the plan and the preservation of
entitlement to exercise the options, the vesting period of the options and the exercise of
the options in pre-set temporal ‘windows’, the conditions for exercising the options, the
procedures for determining the strike price of the shares and the absence of facilitated
conditions for payment by the executives participating in the plan).

The stock option plan for 2003 involved the granting of a total of 47,624,005 options to
549 Group executives at a strike price of €5.240. The review carried out by the Board
of Directors to verify the satisfaction of the conditions of exercise ascertained that both
objectives – surpassing Group EBITDA during the year in which the options were
granted and the performance of Enel’s shares with respect to the benchmark index
described in the Regulations that implement the plan – were achieved. It should be
noted that the period for measuring the performance of both Enel’s shares and the
benchmark – which, according to the Regulations, was to expire on December 31,
2003 – was extended by the Board of Directors until March 26, 2004. This was done in
order to permit normal trading conditions to return and thus allow a more objective
evaluation of whether the targets had been achieved in view of the placement of Enel
shares with institutional investors carried out by the Ministry for the Economy and
Finance in October 2003, which in itself was extraneous to the management of Enel,
but because of its extraordinary size had a considerable influence on the performance
of the shares. Therefore the conditions for exercising all the options granted under the
2003 plan were satisfied. Because of the early termination of employment of the related
grantees, of the 47,624,005 options that were granted and became exercisable (i)
3,288,426 lapsed during the period between the date of granting of the options and the
end of 2005 and (ii) 60,290 lapsed during 2006.
103
In April 2004 the Board of Directors, entirely exercising the enabling authority granted it
by the Shareholders’ Meeting held in May 2003, approved a divisible, paid capital
increase (entailing a maximum potential dilution amounting to about 0.8% of capital at
the time) to serve the options granted under the 2003 plan. This increase, amounting to
a maximum of €47,624,005, is to be subscribed by December 31, 2008 and serves all
the options assigned under the 2003 plan, which have become exercisable and have a
strike price of €5.240.
To implement this Board resolution, in 2006 11,726,012 ordinary shares were issued
and subscribed to serve the equal number of stock options in the 2003 plan that were
exercised in the periods February 2 to February 22, 2006, May 29 to June 16, 2006,
and November 10 to November 30, 2006. They add to the 30,500,492 ordinary shares
issued and subscribed to serve an equal number of stock options in the 2003 plan
exercised during 2004 and 2005.
2004 plan
In May 2004, an extraordinary meeting of the shareholders of Enel initiated a new stock
option plan by resolving to grant the Board of Directors a new authorization to increase
share capital by a maximum of €38,527,550 (about 0.6% of capital at the time), with
characteristics similar to those of the previous authorizations granted in May 2001 and
May 2003, and to be used to serve the 2004 stock option plan, as already approved by
the Board of Directors in March 2004.
capacity as General Manager – is founded on the same rationale as the 2002 and 2003
plans, following most of the provisions of their implementing Regulations and departing
from them only in manner described below.
In particular, although the division of the beneficiaries of the plan into brackets is
maintained, provision is made for granting the options using proportional criteria and no
longer through the application of a multiplier of the ratio between the reference annual
gross compensation of the bracket to which the executive concerned belongs and the
value of a three-year option as determined on the basis of market valuations.
Furthermore, the Regulations establish that – once the conditions of exercise have been
satisfied – 15% of the options granted may be exercised as from the first year
subsequent to the grant year, an additional 15% as from the second year subsequent to
the grant year, an additional 30% as from the third year subsequent to the grant year,
and the remaining 40% as from the fourth year subsequent to the grant year, with the
deadline for exercising all the options being the fifth year subsequent to the grant year.
The temporal “windows” for exercising the options have also been eliminated. The
options may be exercised each year at any time, with the exception of two blocking
104
periods lasting indicatively one month before the approval of the draft annual financial
statements of Enel SpA and the half-year report by the Board of Directors.
With regard to the conditions of exercise – which are suspensory in nature – while the
Group EBITDA target has not changed, that connected with the performance of Enel
shares with respect to the benchmark index is considered for the first time from a total
shareholder return perspective, i.e. taking into account (both for Enel shares and for
the benchmark) of the effect of the reinvestment of the respective gross dividends in
the same securities. This change was adopted to ensure that the actual return that
Enel shares are capable of earning for their shareholders, including in terms of the
distribution of dividends, is consistent with the actual return, in the same terms, on the
reference securities.

The stock option plan for 2004 involved the granting of a total of 38,527,550 options to
640 Group executives at a strike price of €6.242. The review carried out by the Board
of Directors to verify the materialization of the exercise conditions ascertained that both
objectives – surpassing Group EBITDA during the year in which the options were
granted and the performance of Enel shares with respect to the benchmark index
described in the implemental Regulations of the plan – were achieved. It should be
noted that the period for measuring the performance of both Enel’s shares and the
reference index – which, according to the Regulations, was to expire on December 31,
2004 – was extended by the Board of Directors until March 25, 2005 in order to ensure
normal trading conditions and thus permit an objective evaluation of whether the target
had been achieved. This decision was prompted by the placement of Enel shares
through a global offering carried out by the Ministry for the Economy and Finance in
October 2004, which in itself was extraneous to the management of Enel and, because
of its extraordinary size, could have distorted the performance of the shares.
The conditions for exercising all the options assigned under the 2004 plan were
therefore satisfied. Because of early termination of the employment of the related
grantees, of the 38,527,550 options that were granted and became exercisable (i)
1,625,500 lapsed in the period between the date on which the options were granted
and the end of 2005 and (ii) 334,300 lapsed during 2006.

In March 2005 the Board of Directors, entirely exercising the authority granted it by the
Shareholders’ Meeting held in May 2004, approved a divisible, paid capital increase
(entailing a maximum potential dilution of about 0.6% of capital at the time) to serve the
options granted under the 2004 plan. This increase, amounting to a maximum of
€38,527,550, is to be subscribed by December 31, 2009 and serves all the options
105
assigned under the 2004 plan (insofar as they have become exercisable) at a strike
price of €6.242.
To implement this Board resolution, in 2006 6,079,571 ordinary shares were issued
and subscribed to serve the exercise of an equal number of stock options in the 2004
plan. They add to the 12,392,982 ordinary shares issued and subscribed to serve an
equal number of stock options in the 2004 plan exercised during 2005.
2006 plan
In May 2006, an extraordinary meeting of the shareholders of Enel initiated a new stock
option plan by resolving to grant the Board of Directors a new authorization to increase
share capital by a maximum of €31,790,000 (about 0.5% of capital at the time), with
characteristics similar to those of the previous authorizations granted in May 2001, May
2003 and May 2004 and to be used to serve the 2006 stock option plan, as approved
by the same shareholders’ meeting in ordinary session (pursuant to the new
regulations introduced in the Consolidated Law on Financial Intermediation by the law
on the protection of savings).
capacity as General Manager – is founded on the same rationale as the 2002, 2003
and 2004 plans, but is now even more consistent with international best practices,
thanks to the establishment of multi-year performance objectives (rather than annual
targets) in order to encourage the consolidation of results and accentuate the medium-
term characteristics of this tool.
The 2006 plan largely adopts the provisions of the Regulations of the 2004 plan,
differing only in the following respects.
The most significant difference regards the multi-year duration of the exercise
conditions for the options, which retain their suspensory nature and continue to be
linked to the same objectives (Group EBITDA and the performance of Enel’s share
price with respect to the benchmark index) with a view to ensuring full convergence
between the interests of shareholders and management.
More specifically, the 2006 plan establishes that an initial 25% of the options granted
may be exercised on the condition that both of the objectives are achieved in 2006-
2007, while the remaining 75% may be exercised subject to achievement of both
objectives for 2006-2008. If one or both of the objectives are not achieved in 2006-
2007, the initial 25% of the options can be recovered with the achievement of both
objectives over the longer 2006-2008 period.
In addition, once the conditions of exercise have been satisfied, 25% of the options
granted may be exercised as from the second year subsequent to the grant year, an
additional 35% as from the third year subsequent to the grant year, and the remaining
106
40% as from the fourth year subsequent to the grant year, with the deadline for
exercising all the options being the sixth year subsequent to the grant year.

The 2006 plan involved the granting of a total of 31,790,000 options to 461 Group
executives at a strike price of €6.842.
Because of early termination of the employment of the related grantees, of the
31,790,000 options that were granted and became exercisable, 286,000 lapsed in the
period between the date on which the options were granted (August 2006) and the end
of 2006.
The review to be carried out by the Board of Directors to verify the satisfaction of the
exercise conditions for the 2006 plan is scheduled to take place as part of the approval of
the draft financial statements for 2007 (for 25% of the options granted) and 2008 (for the
75% of the options granted).
Payment of a bonus connected with the portion of the dividends attributable to asset
disposals, to be made in conjunction with the exercise of stock options
In March 2004, the Board of Directors voted to grant a special bonus, beginning in
2004, to the beneficiaries of the various stock option plans who exercise the options
granted to them, establishing that the amount is to be determined each time by the
Board itself when it adopts resolutions concerning the allocation of earnings and is
based on the portion of the “disposal dividends” (as defined below) distributed after the
granting of the options.
The rationale underlying this initiative is that the portion of dividends attributable to
extraordinary transactions regarding the disposal of property and/or financial assets
(“disposal dividends”) should be considered a form of return to shareholders of part of the
value of the Company, and as such capable of affecting the performance of the shares.
The beneficiaries of the bonus are thus the beneficiaries of the stock option plans who
– either because they choose to do so or because of the restrictions imposed by the
exercise conditions or the vesting periods – exercise their options after the ex dividend
date of the “disposal dividends” and therefore could be penalized. The bonus is not
paid, however, for the portion of other kinds of dividends, such as those generated by
ordinary business activities or reimbursements associated with regulatory measures.
Essentially, when beneficiaries of the stock option plans have exercised the options
granted to them, since 2004 they have been entitled to receive a sum equal to the
“divestiture dividends” distributed by Enel after the options have been granted but
before they have been exercised. The bonus will be paid by the company of the Enel
Group that employs the beneficiary and is subject to ordinary taxation as income from
employment.
107
Under these rules, to date the Board of Directors has approved: (i) a bonus amounting
to €0.08 per option exercised, with regard to the dividend (for 2003) of €0.36 per share
payable as from June 24, 2004; (ii) a bonus amounting to €0.33 per option exercised,
with regard to the interim dividend (for 2004) of the same amount per share payable as
from November 25, 2004; (iii) a bonus amounting to €0.02 per option exercised, with
regard to the balance of the dividend (for 2004) of €0.36 per share payable as from
June 23, 2005; and (iv) a bonus amounting to €0.19 per option exercised, with regard
to the interim dividend (for 2005) of the same amount per share payable as from
November 24, 2005.
It should be noted that the overall dilution of share capital as of December 31, 2006
attributable to the exercise of the stock options granted under the various plans
amounts to 1.83% and that further developments in the plans could, in theory, increase
the dilution up to a maximum of 2.66%.
The following table summarizes developments in the stock option plans in 2006.
108
2002 plan 2003 plan 2004 plan 2006 plan
(year of expiration: 2007) (year of expiration: 2008) (year of expiration: 2009) (year of expiration: 2012)
Exercise Market Exercise Market Exercise Market Exercise Market
Number price price Number price price Number price price Number price price
(1) (1) (1) (1)
Options of options (euro) (euro) of options (euro) (euro) of options (euro) (euro) of options (euro) (euro)
Options outstanding at January 1, 2006 2,074,350 6.426 6.687 13,835,087 5.240 6.687 24,509,068 6.242 6.687 - - -
New options granted in 2006 - - - - - - - - - 31,790,000 6.842 6.990
Options exercised in 2006 1,319,050 6.426 7.433 11,726,012 5.240 7.138 6,079,571 6.242 7.293 - - -
Options lapsed in 2006 - - - 60,290 5.240 7.083 334,300 6.242 7.187 286,000 6.842 7.281
Options outstanding at December 31, 2006 755,300 6.426 7.815 2,048,785 5.240 7.815 18,095,197 6.242 7.815 31,504,000 6.842 7.815
- exercisable at December 31, 2006 755,300 6.426 7.815 2,048,785 5.240 7.815 3,672,711 6.242 7.815 - - -
(1) Market prices are calculated on the basis of Consob instructions set out in recommendation no. 11508 of February 15, 2000 regarding disclosures on stock option plans.
109
Reconciliation of shareholders’ equity and net income of Enel SpA
and the corresponding consolidated figures
Pursuant to Consob Notice no. DEM/6064293 of July 28, 2006, the following table
provides a reconciliation of Group results for the year and shareholders’ equity with the
corresponding figures for the Parent Company.
Income Shareholders’ Income Shareholders’

Millions of euro statement equity statement equity
2006 at Dec. 31, 2006 2005 at Dec. 31, 2005
Financial statements - Enel SpA: 3,347 14,600 2,696 15,025
- Carrying amount and impairment adjustments of

consolidated equity investments and equity
investments accounted for using the equity method 64 (18,010) 236 (17,311)
- Shareholders’ equity and net income (calculated
using harmonized accounting policies) of the
consolidated companies and groups and those
accounted for using the equity method, net of
minority interests 2,733 21,905 2,522 21,219
- Consolidation differences at the Group
consolidation level 27 983 - (277)
- Intragroup dividends (3,084) - (1,610) -

- Elimination of unrealized intragroup income, net of
tax effects and other minor adjustments (51) (1,018) 51 401
TOTAL GROUP 3,036 18,460 3,895 19,057
TOTAL MINORITY INTERESTS 65 565 237 359
CONSOLIDATED FINANCIAL STATEMENTS 3,101 19,025 4,132 19,416
110
Consolidated financial statements
Consolidated Income Statement
Millions of euro Notes

2006 2005
of which with of which with

related parties related parties
Revenues
Revenues from sales and services 6.a 37,497 9,795 32,370 9,364
Other revenues 6.b 1,016 7 1,417 1
[Subtotal] 38,513 9,802 33,787 9,365
Income from equity exchange transaction 7 263 -
Costs
Raw materials and consumables 8.a 23,469 14,620 20,633 13,762
Services 8.b 3,477 1,285 3,057 1,338
Personnel 8.c 3,210 2,762
Depreciation, amortization and impairment losses 8.d 2,463 2,207
Other operating expenses 8.e 713 45 911 27
Capitalized costs 8.f (989) (1,049)
[Subtotal] 32,343 15,950 28,521 15,127
Net income/(charges) from commodity risk management 9 (614) (519) 272 289
Operating income 5,819 5,538
Financial income 10 513 14 230 6

Financial expense 10 1,160 944
Share of income/(expense) from equity investments accounted
for using the equity method 11 (4) (30)
Income before taxes 5,168 4,794
Income taxes 12 2,067 1,934
Income from continuing operations 3,101 2,860
Income from discontinued operations 13 1,272 693
Net income for the period (shareholders of the Parent

Company and minority interests) 3,101 4,132
Attributable to minority interests 65 237

Attributable to shareholders of the Parent Company 3,036 3,895
Earnings per share (euro) 0.50 0.67

(1)
Diluted earnings per share (euro) 0.50 0.67
Earnings from continuing operations per share 0.50 0.46
(1)
Diluted earnings from continuing operations per share 0.50 0.46
Earnings from discontinued operations per share - 0.21
(1)
Diluted earnings from discontinued operations per share - 0.21
(1) Calculated on the basis of the average number of ordinary shares in the year (6,169,511,965 in 2006 and 6,142,108,113 in 2005)
adjusted for the diluting effect of outstanding stock options (65 million in 2006, 29 million in 2005).
Earnings and diluted earnings per share, calculated on the basis of options exercised to date, do not change with respect to the
figures calculated as above.
113
Consolidated Balance Sheet

ASSETS at Dec. 31, 2006 at Dec. 31, 2005

Non-current assets
Property, plant and equipment 14 34,846 30,188
Intangible assets 15 2,982 2,182
Deferred tax assets 16 1,554 1,778
Equity investments accounted for using the equity method 17 56 1,797
Non-current financial assets 18 1,494 836
Other non-current assets 19 568 975
[Total] 41,500 37,756
Current assets
Inventories 20 1,209 884
Trade receivables 21 7,958 1,935 8,316 2,756
Tax receivables 22 431 789
Current financial assets 23 402 10 569 3
Cash and cash equivalents 24 547 476
Other current assets 25 2,453 182 1,712
[Total] 13,000 12,746
TOTAL ASSETS 54,500 50,502
114
LIABILITIES AND SHAREHOLDERS’ EQUITY at Dec. 31, 2006 at Dec. 31, 2005

Equity attributable to the shareholders

of the Parent Company 26
Share capital 6,176 6,157
Other reserves 4,549 4,251
Retained earnings (losses carried forward) 5,934 5,923
Net income for the period (1) 1,801 2,726
[Total] 18,460 19,057
Equity attributable to minority interests 565 359
TOTAL SHAREHOLDERS’ EQUITY 19,025 19,416
Non-current liabilities
Long-term loans 27 12,194 10,967
Post-employment and other employee benefits 28 2,633 2,662
Provisions for risks and charges 29 4,151 1,267
Deferred tax liabilities 30 2,504 2,464
Non-current financial liabilities 31 116 262
Other non-current liabilities 32 1,044 846
[Total] 22,642 18,468
Current liabilities
Short-term loans 33 1,086 1,361
Current portion of long-term loans 27 323 935
Trade payables 34 6,188 3,064 6,610 3,799
Income tax payable 189 28
Current financial liabilities 35 941 294
Other current liabilities 36 4,106 303 3,390
[Total] 12,833 12,618
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 54,500 50,502
(1) Net income is reported net of interim dividend equal to €1,235 million for 2006 and €1,169 million for 2005.
115
Consolidated Statement of Cash Flows

2006 2005
Income for the period (shareholders of the Parent Company

and minority interests) 3,101 4,132
Adjustments for:
Amortization and impairment losses of intangible assets 15 193 308
Depreciation and impairment losses of property, plant and equipment 14 2,160 2,561
Exchange rate gains and losses (including cash and cash equivalents) (87) 22
Provisions 820 781
Financial (income)/expense 515 808
Income taxes 12 2,067 2,147
(Gains)/losses and other non-monetary items (407) (1,295)
Cash flow from operating activities before changes in net current assets 8,362 9,464
Increase/(decrease) in provisions (749) (814)

(Increase)/decrease in inventories (109) 125 1
(Increase)/decrease in trade receivables 449 531 (1,919) (1,365)
(Increase)/decrease in financial and non-financial assets/liabilities 776 118 250 (8)
Increase/(decrease) in trade payables (497) (542) 1,265 1,182
Interest income and other financial income collected 312 14 202 6
Interest expense and other financial expense paid (847) (1,065)
Income taxes paid (941) (1,815)
Cash flows from operating activities (a) 6,756 5,693
- of which: discontinued operations 730
Investments in property, plant and equipment 14 (2,759) (3,037)

Investments in intangible assets 15 (204) (220)
Investments in entities (or business units) less cash
and cash equivalents acquired (1,082) (524)
Disposals of entities (or business units) less cash
and cash equivalents sold 1,518 4,652
(Increase)/decrease in other investing activities 153 221
Cash flows from investing/disinvesting activities (b) (2,374) 1,092
- of which: discontinued operations (439)
Financial debt (new borrowing) 27 1,524 1,759

Financial debt (repayments and other changes) (1,995) (7) (5,283) 12
Dividends paid 26 (3,959) (3,472)
Increase in share capital and reserves due to the exercise
of stock options 26 108 339
Capital contributed by minority shareholders - 3
Cash flows from financing activities (c) (4,322) (6,654)
- of which: discontinued operations (11)
Impact of exchange rate fluctuations on cash

and cash equivalents (d) 4 14
Increase/(decrease) in cash and cash equivalents (a+b+c+d) 64 145

Cash and cash equivalents at beginning of the year 508 363

(1)
Cash and cash equivalents at the end of the year 572 508
- of which: discontinued operations (2) -
(1) Of which short-term securities equal to €25 million at December 31, 2006.
(2) Cash and cash equivalents in respect of discontinued operations at the time of their disposal, equal to €413 million, were deducted from the gain on disposal
included in the cash flow from disinvesting activities.
116
Statement of Profits and Losses Recognized for the Period

2006 2005
Effective portion of change in the fair value of cash flow hedges 123 102
Change in the fair value of financial investments available for sale 45 132
Exchange rate differences 66 32
Net income for period recognized in equity 26 234 266

Net income for period recognized in income statement 3,101 4,132
Total profits and losses recognized for the period 3,335 4,398
Attributable to:
- shareholders of the Parent Company 3,238 4,164
- minority interests 97 234
117
Notes to the financial statements
1. Accounting policies and measurement criteria

Enel SpA, which operates in the energy utility sector, has its registered office in Rome,
Italy. The consolidated financial statements of the Company for the year ending
December 31, 2006 comprise the financial statements of the Company and its
subsidiaries (“the Group”) and the Group’s holdings in associated companies and joint
ventures. A list of the subsidiaries included in the scope of consolidation is reported in
the annex.
These financial statements were approved for publication by the Board on March 27, 2007.
Compliance with IFRS/IAS

The consolidated financial statements for the year ended December 31, 2006 have been
prepared in compliance with international accounting standards (International Accounting
Standards (IAS) or International Financial Reporting Standards (IFRS), the
interpretations of the International Financial Reporting Interpretations Committee (IFRIC)
and the Standing Interpretations Committee (SIC) endorsed by the European Union
(hereinafter, “IFRS-EU”), as well as with pronouncements issued in implementation of
Article 9, paragraph 3, of Legislative Decree 38 of February 28, 2005.
Basis of presentation
The consolidated financial statements consist of the consolidated balance sheet, the
consolidated income statement, the consolidated statement of cash flows, the
consolidated statement of income and charges recognized for the period and the
related notes.
The assets and liabilities reported in the consolidated balance sheet are classified on a
“current/non-current basis”, with separate reporting of assets and liabilities held for
sale. Current assets, which include cash and cash equivalents, are assets that are
intended to be realized, sold or consumed during the normal operating cycle of the
company or in the twelve months following the balance-sheet date; current liabilities
are liabilities that are expected to be settled during the normal operating cycle of the
company or within the twelve months following the close of the financial year.
The consolidated income statement is classified on the basis of the nature of costs,
while the indirect method is used for the cash flow statement.
The consolidated financial statements are presented in euro, the functional currency of
the Parent Company Enel SpA. All figures are shown in millions of euro unless stated
otherwise.
118
The financial statements are prepared using the cost method, with the exception of
items that are measured at fair value under IFRS-EU, as specified in the measurement
policies for the individual items.
Use of estimates
Preparing the consolidated financial statements under IFRS-EU requires the use of
estimates and assumptions that impact the carrying amount of assets and liabilities and
the related information on the items involved as well as the disclosure required for
contingent assets and liabilities at the balance sheet date. The estimates and the
related assumptions are based on previous experience and other factors considered
reasonable in the circumstances. They are formulated when the carrying amount of
assets and liabilities is not easily determined from other sources. The actual results
may therefore differ from these estimates. The estimates and assumptions are
periodically revised and the effects of any changes are reflected in the income
statement if they only involve that period. If the revision involves both the current and
future periods, the change is recognized in the period in which the revision is made and
in the related future periods.
A number of accounting policies are felt to be especially important for understanding
the financial statements. To this end, the following section examines the main items
affected by the use of estimates, as well as the main assumptions used by
management in measuring these items in compliance with the IFRS-EU. The critical
element of such estimates is the use of assumptions and professional judgments
concerning issues that are by their very nature uncertain.
Changes in the conditions underlying the assumptions and judgments could have a
substantial impact on future results.
Revenue recognition
Revenues from sales to retail and wholesale customers are recognized on an accruals
basis. Revenues from sales of electricity and gas to retail customers are recognized at
the time the electricity or gas is supplied on the basis of periodic meter readings and
also include an estimate of the value of electricity and gas consumption between the
date of the last meter reading of the year. Revenues between the date of the meter
reading and the end of the year are based on estimates of the daily consumption of
individual customers calculated on the basis of their consumption record, adjusted to
take account of weather conditions and other factors that may affect consumption.
Pensions and other post-employment benefits

Part of the Group’s employees participate in pension plans offering benefits based on
their wage history and years of service.
119
Certain employees are also eligible for other post-employment benefit schemes. The
expenses and liabilities of such plans are calculated on the basis of estimates carried
out by consulting actuaries, who use a combination of statistical and actuarial elements
in their calculations, including statistical data on past years and forecasts of future
costs.
Other components of the estimation that are considered include mortality and
withdrawal rates as well as assumptions concerning future developments in discount
rates, the rate of wage increases and trends in the cost of medical care.
These estimates can differ significantly from actual developments owing to changes in
economic and market conditions, increases or decreases in withdrawal rates and the
lifespan of participants, as well as changes in the effective cost of medical care.
Such differences can have a substantial impact on the quantification of pension costs
and other related expenses.
Recoverability of non-current assets

The carrying amount of non-current assets held and used (including goodwill and other
intangibles) and assets held for sale is reviewed periodically and wherever
circumstances or events suggest that more frequent review is necessary.
Where the value of a group of non-current assets is considered to be impaired, the
carrying amount of the group of assets is written down to its recoverable value, as
estimated on the basis of the use of the assets and their future disposal, in accordance
with the company’s most recent plans.
The estimates of such recoverable values are considered reasonable. Nevertheless,
possible changes in the estimation factors on which the calculation of such values is
performed could generate different recoverable values. The analysis of each group of
non-current assets is unique and requires management to use estimates and
assumptions considered prudent and reasonable in the specific circumstances.
Recovery of deferred tax assets

At December 31, 2006, the financial statements report deferred tax assets in respect of
tax losses to be reversed in subsequent years in an amount whose recovery is
considered by management to be highly probable.
The recoverability of such assets associated with losses carried forward is subject to
the achievement of future profits sufficient to absorb such losses.
The assessment takes account of the estimate of future taxable incomes and is based
on prudent tax planning strategies. However, where the Group should become aware
that it would be unable to recover all or part of such tax assets in future years, the
consequent adjustment of the assets would be taken to the income statement in the
year in which this circumstance arises.
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Litigation
The Enel Group is involved in various legal disputes regarding the generation, transport
and distribution of electricity. In view of the nature of such litigation, it is not possible to
predict the outcome of such disputes, which in some cases could be unfavorable.
Nevertheless, provisions have been recognized to cover all significant liabilities for
cases in which legal counsel feels an adverse outcome is likely and a reasonable
estimate of the amount of the loss can be made.
The Group is also involved in various disputes regarding urban planning and
environmental issues (mainly regarding exposure to electromagnetic fields) associated
with the construction and operation of a number of generation facilities and power lines.
Provision for doubtful accounts

The provision for doubtful accounts reflects estimates of losses on the Group’s
receivables. Provisions have been made against expected losses calculated on the
basis of historical experience with receivables with similar credit risk profiles, current
and historical arrears, eliminations and collections, as well as the careful monitoring of
the quality of the receivables portfolio and current and forecast conditions in the
economy and the relevant markets.
Although the provision recognized is considered appropriate, the use of different
assumptions or changes in economic conditions could lead to changes in the provision
and therefore impact net income.
The estimates and assumptions are reviewed periodically and the effects of any
change are taken to the income statement should they regard only that year.
Where changes should involve the current and future years, the variation is recognized
in the year in which the review is conducted and in the related future years.
Decommissioning and site restoration

In calculating liabilities in respect of decommissioning and site restoration costs,
especially for the decommissioning of nuclear power plants and the storage of waste
fuel and other radioactive materials, the estimation of future costs is a critical process
in view of the fact that such costs will be incurred over a very long period of time,
estimated at up to 100 years.
The obligation, based on financial and engineering assumptions, is calculated by
discounting the expected future cash flows that the Company considers it will have to
pay for the decommissioning operation.
The discount rate used to determine the present value of the liability is the pre-tax risk-
free rate and is based on the economic parameters of the country in which the nuclear
plant is located.
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That liability, which requires management to make professional judgments in
calculating its amount, is quantified on the basis of the technology existing at the
measurement date and is reviewed each year, taking account of developments in
decommissioning and site restoration technology, as well as the ongoing evolution of
the legislative framework and the sensitivity of governments and the general public to
the protection of health and the environment.
Subsequently, the obligation is increased to reflect the passage of time and any
changes in estimates.
In addition to the items listed above, estimates were also used with regard to financial
instruments, share-based payment plans and the fair value measurement of assets and
liabilities acquired in business combinations. For these items, the estimates and
assumptions are discussed in the notes on the accounting policies adopted.
Related parties
Related parties are mainly parties that have the same parent company with Enel SpA,
companies that directly or indirectly through one or more intermediaries control, are
controlled or are subject to the joint control of Enel SpA and in which the latter has a
holding that enables it to exercise a significant influence. Related parties also include
the managers with strategic responsibilities, and their close relatives, of Enel SpA and
the companies over which it exercises direct, indirect or joint control and over which it
exercises a significant influence. Managers with strategic responsibilities are those
persons who have the power and direct or indirect responsibility for the planning,
management and control of the activities of the company. They include company
directors.
Subsidiaries
Subsidiaries comprise those entities for which the Group has the direct or indirect
power to determine their financial and operating policies for the purposes of obtaining
the benefits of their activities. In assessing the existence of a situation of control,
account is also taken of potential voting rights that are effectively exercisable or
convertible. The figures of the subsidiaries are consolidated on a full line-by-line basis
as from the date control is acquired until such control ceases.
Special purpose entities

The Group consolidates a special purpose entity (SPE) when it exercises de facto
control over such entity. Control is achieved if in substance the Group obtains the
majority of the benefits produced by the SPE and supports the majority of the
remaining risks or risks of ownership of the SPE, even if it does not own an equity
interest in such entity.
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Associated companies
Associated companies comprise those entities in which the Group has a significant
influence. Potential voting rights that are effectively exercisable or convertible are also
taken into consideration in determining the existence of significant influence. These
companies are initially recognized at cost and are subsequently measured using the
equity method, allocating the purchase costs of the assets, liabilities and identifiable
contingent liabilities of the acquired company at their fair values in an analogous
manner to the treatment of business combinations. The Group’s share of profit or loss
is recognized in the consolidated financial statements from the date on which it
acquires the significant influence over the entity until such influence ceases.
Should the Group’s share of the loss for the period exceed the carrying amount of the
equity investment, the latter is impaired and any excess recognized in a provision if the
Group had a legal or constructive obligation to cover the associate’s loss.
Joint ventures
Interests in joint ventures – enterprises in which the Group exercises joint control with
other entities – are consolidated using the proportionate method. The Group
recognizes its share of the assets, liabilities, revenues and expenses on a line-by-line
basis in proportion to the Group’s share in the entity from the date on which joint
control is acquired until such control ceases. Potential voting rights that are effectively
exercisable or convertible are taken into consideration in determining the existence of
joint control.
The following table reports the contribution of joint ventures to the main aggregates in
the consolidated financial statements:
Enel Unión Fenosa

(1)
Millions of euro Fortuna Renovables RusEnergoSbyt
at Dec. 31, 2006
Percentage consolidation 49.9% 50.0% 49.5%
Current assets 26 52 17
Non-current assets 154 234 -
Current liabilities 14 44 10
Non-current liabilities 47 182 -
Revenues 18 53 202
Costs 15 31 196
(1) Includes amounts for companies over which Enel Unión Fenosa Renovables exercises joint control.
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Consolidation procedure
The financial statements of subsidiaries used to prepare the consolidated financial
statements were prepared at December 31, 2006 in accordance with the accounting
policies adopted by the Parent Company.
All intragroup balances and transactions, including any unrealized profits or losses on
transactions within the Group, are eliminated, net of the theoretical tax effect.
Unrealized profits and losses with associates and joint ventures are eliminated for the
part attributable to the Group.
In both cases, unrealized losses are eliminated except when relating to impairment.
Translation of foreign currency items

Each subsidiary prepares its financial statements in the functional currency of the
economy in which it operates.
Transactions in currencies other than the functional currency are recognized in these
financial statements at the exchange rate prevailing on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency other than the
functional currency are later adjusted using the balance sheet exchange rate. Any
exchange rate differences are recognized in profit or loss.
Non-monetary assets and liabilities in foreign currency stated at historic cost are
translated using the exchange rate prevailing on the date of initial recognition of the
transaction. Non-monetary assets and liabilities in foreign currency carried at fair value
are translated using the exchange rate prevailing on the date the related carrying
amount is determined.
Translation of financial statements denominated in a foreign currency

For the purposes of the consolidated financial statements, all profits/losses, assets and
liabilities are stated in euro, which is the functional currency of the Parent Company,
Enel SpA.
In order to prepare the consolidated financial statements, the financial statements of
consolidated companies in functional currencies other than the euro are translated into
euro by applying the relevant period-end exchange rate to the assets and liabilities,
including goodwill and consolidation adjustments, and the average exchange rate for
the period, which approximates the exchange rates prevailing at the date of the
respective transactions, to the income statement items.
Any resulting exchange rate gains or losses are recognized as a separate component
of equity in a special reserve. The gains and losses are recognized in the income
statement on the disposal of the subsidiary.
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Business combinations
All business combinations are recognized using the purchase method, where the
purchase cost is equal to the fair value at the date of the exchange of the assets
acquired and the liabilities assumed, plus any costs directly attributable to the acquisition.
This cost is allocated by recognizing the assets, liabilities and identifiable contingent
liabilities of the acquired company at their fair values. Any positive difference between
the purchase cost and the fair value of the share of the net assets acquired attributable to
the Group is recognized as goodwill. Any negative difference is recognized in profit or
loss. If the fair values of the assets, liabilities and contingent liabilities can only be
calculated on a provisional basis, the business combination is recognized using such
provisional values. Any adjustments resulting from the completion of the measurement
process are recognized within twelve months of the date of acquisition.
On first-time adoption of the IFRS-EU, the Group elected to not apply IFRS 3 (Business
combinations) retrospectively to acquisitions carried out before January 1, 2004.
Accordingly, the goodwill associated with acquisitions carried out prior to the IFRS-EU
transition date is still carried at the amount reported in the last consolidated financial
statements prepared on the basis of previous accounting standards (December 31,
2003).
Property, plant and equipment

Property, plant and equipment is recognized at historic cost, including directly
attributable ancillary costs necessary for the asset to be ready for use. It is increased
by the present value of the estimate of the costs of decommissioning and removing the
asset where there is a legal or constructive obligation to do so.
The corresponding liability is recognized under provisions for risks and charges.
Financial charges in respect of loans granted for the purchase of the assets are
recognized in profit or loss as an expense in the period they accrue.
Certain items of property, plant and equipment that were revalued at January 1, 2004
(the transition date) or in previous periods are recognized at their revalued amount,
which is considered as their deemed cost at the revaluation date.
The accounting treatment of changes in the estimate of these costs, the passage of
time and the discount rate is discussed under “Provisions for risks and charges”.
Subsequent expenditure relating to an item of property, plant and equipment is
recognized as an increase in the carrying amount of the asset when it is probable that
future economic benefits deriving from the cost incurred to replace a component of
such item will flow to the enterprise and the cost of the item can be reliably determined.
All other expenditure is recognized as an expense in the period in which it is incurred.
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Where major components of property, plant and equipment have different useful lives,
the components are recognized and depreciated separately.
The cost of replacing part or all of an asset is recognized as an increase in the value of
the asset and is depreciated over its useful life; the net carrying amount of the replaced
unit is eliminated through profit or loss, with the recognition of any capital gain/loss.
Property, plant and equipment is reported net of accumulated depreciation and any
impairment losses determined as set out below. Depreciation is calculated on a
straight-line basis over the item’s estimated useful life, which is reviewed annually, and
any changes are reflected on a prospective basis. Depreciation begins when the asset
is ready for use.
The estimated useful life of the main items of property, plant and equipment is as
follows:
Useful life
Civil buildings 40 years

(1)
Hydroelectric power plants 40 years
(1)
Thermal power plants 40 years
Nuclear power plants 40 years
Geothermal power plants 20 years
Alternative energy power plants 20 years
Transport lines 40 years
Transformation plant 32-42 years
Medium- and low-voltage distribution networks 30-40 years
Gas distribution networks and meters 25-50 years
Telecommunications systems and networks 5.5-20 years
Industrial and commercial equipment 4 years
(1) Excluding assets to be relinquished at end of concession, which are depreciated over
the duration of the concession if shorter than useful life.
Land, both unbuilt and on which civil and industrial buildings stand, is not depreciated
as it has an indefinite useful life.
The Group is the concession holder for the distribution and sale of electricity to the
regulated market (non-eligible customers). The concession, granted by the Ministry for
Economic Development, was issued free of charge and terminates on December 31, 2030.
If the concession is not renewed upon expiry, the grantor is required to pay Enel an
indemnity, at current values, for the assets owned by the Group that serve the concession.
These assets, which comprise the electricity distribution networks, are recognized under
“Property, plant and equipment” and are depreciated over their useful lives.
The Group’s plants include assets to be relinquished free of charge at the end of the
concession. These mainly regard major water diversion works and the public lands
used for the operation of the thermal power plants. The concessions terminate in 2029,
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and in 2020 respectively (2010 for plants located in the Autonomous Provinces of
Trento and Bolzano). If the concessions are not renewed, at those dates all intake and
governing works, penstocks, outflow channels and other assets on public lands will be
relinquished free of charge to the State in good operating condition. The Group
believes that the existing ordinary maintenance programs ensure that the assets will be
in good operating condition at the termination date.
Accordingly, depreciation on assets to be relinquished is calculated over the shorter of
the term of the concession and the remaining useful life of the assets.
The Group also operates in the gas distribution sector under concessions granted by
local authorities for terms not exceeding twelve years. Local authorities can use service
agreements to regulate the terms and conditions of the distribution service, as well as
quality targets to be achieved. The concessions are granted based upon the financial
conditions, quality and safety standards, investment plans, and technical and
managerial expertise offered. The majority of the gas distribution concessions held by
Enel expire on December 31, 2009. For the majority of the concessions, upon expiry
the local authorities will hold new tenders to renew the concession. If the concession is
not renewed, the new concession holder is required to pay to the Group an indemnity
equal to the fair value of the assets that serve the concession. For certain concessions,
on the expiry date the distribution networks will be relinquished free of charge to the
local authorities in good operating condition. Such assets are carried under “Property,
plant and equipment” and are depreciated over their useful life, where the concession
agreement provides for an indemnity at the end of the concession period, or on the
basis of the shorter of the term of the concession and the remaining useful life of the
assets, where the assets are to be relinquished free of charge at the end of the
concession.
Property, plant and equipment acquired under finance leases, whereby all risks and
rewards incident to ownership are substantially transferred to the Group, are initially
recognized as Group assets at the lower of fair value and the present value of the
minimum lease payments due, including the payment required to exercise any
purchase option. The corresponding liability due to the lessor is recognized under
financial payables. The assets are depreciated on the basis of their useful lives. If it is
not reasonably certain that the Group will acquire the assets at the end of the lease,
they are depreciated over the shorter of the lease term and the useful life of the assets.
Leases where the lessor retains substantially all risks and rewards incident to
ownership are classified as operating leases. Operating lease costs are taken to profit
or loss on a systematic basis over the term of the lease.
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Intangible assets
Intangible assets, all with a definite useful life, are measured at purchase or internal
development cost, when it is probable that the use of such assets will generate future
economic benefits and the related cost can be reliably determined.
The cost includes any directly attributable incidental expenses necessary to make the
assets ready for use. The assets are shown net of accumulated amortization and any
impairment losses, determined as set out below.
Amortization is calculated on a straight-line basis over the item’s estimated useful life,
which is checked annually; any changes in amortization policies are reflected on a
prospective basis.
Amortization commences when the asset is ready for use.
The estimated useful life of the main intangible assets is reported in the notes to the
caption.
Goodwill deriving from the acquisition of subsidiaries, associated companies or joint

ventures is allocated to each of the cash-generating units identified. After initial
recognition, goodwill is not amortized and is adjusted for any impairment losses,
determined using the criteria described in the notes. Goodwill relating to equity
investments in associates is included in their carrying amount.
Impairment losses
Property, plant and equipment and intangible assets with a definite life are reviewed at
least once a year to determine whether there is evidence of impairment. If such
evidence exists, the recoverable amount of any property, plant and equipment and
intangible assets with a definite life is estimated.
The recoverable amount of goodwill and intangible assets with an indefinite useful life,
if any, as well as that of intangible assets not yet available for use, is estimated
annually.
The recoverable amount is the higher of an asset’s fair value less selling costs and its
value in use.
Value in use is determined by discounting estimated future cash flows using a pre-tax
discount rate that reflects the current market assessment of the time value of money
and the specific risks of the asset. The recoverable amount of assets that do not
generate independent cash flows is determined based on the cash-generating unit to
which the asset belongs.
An impairment loss is recognized in the income statement if an asset’s carrying amount
or that of the cash-generating unit to which it is allocated is higher than its recoverable
amount.
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Impairment losses of cash generating units are first charged against the carrying
amount of any goodwill attributed to it and then against the value of other assets, in
proportion to their carrying amount.
With the exception of those recognized for goodwill, impairment losses are reversed if
the impairment has been reduced or is no longer present or there has been a change
in the assumptions used to determine the recoverable amount.
Inventories
Inventories are measured at the lower of cost and net estimated realizable value.
Average weighted cost is used, which includes related ancillary charges. Net estimated
realizable value is the estimated normal selling price net of estimated selling costs.
The consumption of nuclear fuel is recognized on the basis of the energy generated by
the nuclear power plants.
Financial instruments
Debt securities
Debt securities that the Company intends and is able to hold until maturity are
recognized at the trade date and, upon initial recognition, are measured at fair value
including transaction costs; subsequently, they are measured at amortized cost using
the effective interest rate method, net of any impairment losses.
For securities measured at fair value through shareholders’ equity (available-for-sale
securities), when a reduction in fair value has been recognized directly in equity and
there is objective evidence that such securities have suffered an impairment loss, the
cumulative loss recognized in equity is reversed to the income statement.
For securities measured at amortized cost (loans and receivables or held-to-maturity
investments), the amount of the loss is equal to the difference between the carrying
amount and the present value of future cash flows discounted using the original
effective interest rate.
Debt securities held for trading and designated at fair value through profit or loss are
initially recognized at fair value and subsequent variations are recognized in profit or
loss.
Equity investments in other entities and other financial assets

Equity investments in entities other than subsidiaries, associates and joint ventures as
well as other financial assets are recognized at fair value with any gains or losses
recognized in equity (if classified as “available for sale”) or in profit or loss (if classified
as “fair value through profit or loss”). On the sale of available-for-sale assets, any
accumulated gains and losses are released to the income statement.
129
When the fair value cannot be determined reliably, equity investments in other entities
are measured at cost adjusted by impairment losses with any gains or losses
recognized in profit or loss. Such impairment losses are measured as the difference
between the carrying amount and the present value of future cash flows discounted
using the market interest rate for similar financial assets. The losses are not reversed.
Other assets classified under “loans and receivables” are initially recognized at fair
value adjusted for transaction costs and are subsequently measured at amortized cost
using the effective interest rate method, net of any impairment losses.
Such cumulative impairment losses for assets measured at fair value through
shareholders’ equity are equal to the difference between the purchase cost (net of any
principal repayments and amortization) and the current fair value, reduced for any loss
already recognized through profit or loss, and are reversed from equity to the income
statement.
Trade receivables
Trade receivables are recognized at amortized cost, net of any impairment losses.
Impairment is determined on the basis of the present value of estimated future cash
flows, discounted at the original effective interest rate.
Trade receivables falling due in line with generally accepted trade terms are not
discounted.
Cash and cash equivalents

This category is used to record cash and cash equivalents that are available on
demand or at very short term, clear successfully and do not incur collection costs.
Cash and cash equivalents are recognized net of bank overdrafts at period-end in the
consolidated statement of cash flows.
Trade payables
Trade payables are recognized at amortized cost. Trade payables falling due in line
with generally accepted trade terms are not discounted.
Financial liabilities
Financial liabilities other than derivatives are initially recognized at the settlement date
at fair value, less directly attributable transaction costs. Financial liabilities are
subsequently measured at amortized cost using the effective interest rate method.
Derivative financial instruments

Derivatives are recognized at the trade date at fair value and are designated as
hedging instruments when the relationship between the derivative and the hedged item
130
is formally documented and the effectiveness of the hedge (assessed periodically) is
high.
The manner in which the result of measurement at fair value is recognized depends on
the type of hedge accounting adopted.
When the derivatives are used to hedge the risk of changes in the fair value of hedged
assets or liabilities, any changes in the fair value of the hedging instrument are taken to
profit or loss. The adjustments in the fair values of the hedged assets or liabilities are
also taken to profit or loss.
When derivatives are used to hedge the risk of changes in the cash flows generated by
the hedged items, changes in fair value are initially recognized in equity, in the amount
qualifying as effective, and subsequently released to profit or loss in line with the gains
and losses on the hedged item.
The ineffective portion of the fair value of the hedging instrument is taken to profit or
loss.
Changes in the fair value of derivatives that no longer qualify for hedge accounting
under IFRS-EU are recognized in profit or loss.
Derivative financial instruments are recognized at the trade date.
Employee benefits
Liabilities related to employee benefits paid upon leaving or after ceasing employment
in connection with defined benefit plans or other long-term benefits accrued during the
employment period, which are recognized net of any plan assets, are determined
separately for each plan, using actuarial assumptions to estimate the amount of the
future benefits that employees have accrued at the balance sheet date. The liability is
recognized on an accruals basis over the vesting period of the related rights. These
appraisals are performed by independent actuaries.
The cumulative actuarial gains and losses exceeding 10% of the greater of the present
value of the defined benefit obligation and the fair value of the plan assets are
recognized in profit or loss over the expected average remaining working lives of the
employees participating in the plan. Otherwise, they are not recognized.
Where there is a demonstrable commitment, with a formal plan without realistic
possibility of withdrawal, to a termination before retirement eligibility has been reached,
the benefits due to employees in respect of the termination are recognized as a cost
and measured on the basis of the number of employees that are expected to accept
the offer.
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Share-based payments
The cost of services rendered by employees and remunerated through stock option plans is
determined based on the fair value of the options granted to employees at the grant date.
The calculation method to determine the fair value considers all characteristics of the
option (option term, price and exercise conditions, etc.), as well as the Enel share price at
the grant date, the volatility of the stock and the yield curve at the grant date consistent with
the expected life of the plan. The pricing model used is the Cox-Rubinstein.
This cost is recognized in the income statement over the vesting period considering the
best estimate possible of the number of options that will become exercisable.
Provisions for risks and charges

Accruals to the provisions for risks and charges are recognized where there is a legal or
constructive obligation as a result of a past event at period-end, the settlement of which
is expected to result in an outflow of resources whose amount can be reliably estimated.
Where the impact is significant, the accruals are determined by discounting expected
future cash flows using a pre-tax discount rate that reflects the current market
assessment of the time value of money and, if applicable, the risks specific to the liability.
If the amount is discounted, the increase in the provision over time is recognized as a
financial expense.
Where the liability relates to decommissioning and/or site restoration in respect of
property, plant and equipment, the provision offsets the related asset. The expense is
recognized in profit or loss through the depreciation of the item of property, plant and
equipment to which it relates.
Where the liability regards the treatment and storage of nuclear waste and other
radioactive materials, the provision is recognized against the related operating costs.
Changes in estimates are recognized in the income statement in the period in which
the changes occur, with the exception of those in the costs of dismantling, removal and
remediation resulting from changes in the timetable and costs necessary to extinguish
the obligation or a change in the discount rate, which increase or decrease the value of
the related assets and are taken to the income statement through depreciation. Where
they increase the value of the assets, it is also determined whether the new carrying
amount of the assets may not be fully recoverable. If this is the case, the assets are
tested for impairment, estimating the unrecoverable amount and recognizing any loss
in respect of the impairment.
Where the changes in estimates decrease the value of the assets, the reduction is
recognized up to the carrying amount of the assets. Any excess is recognized
immediately in the income statement.
As regards the estimation criteria used to determine provisions for decommissioning
and/or site restoration, especially those concerning nuclear power plants, please see
the section on the use of estimates.
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Grants
Grants are recognized at fair value when it is reasonably certain that they will be
received or that the conditions for receipt have been met.
Grants received for specific expenditure or specific assets the value of which is
recognized as an item of property, plant and equipment or an intangible asset are
recognized as other liabilities and credited to the income statement over the period in
which the related costs are recognized.
Revenues
Revenues are recognized using the following criteria depending on the type of
transaction:
revenues from the sale of goods are recognized when the significant risks and
rewards of ownership are transferred to the buyer and their amount can be reliably
determined and collected;
revenues from the sale and transport of electricity and gas refer to the quantities
provided during the period, even if these have not yet been invoiced, and are
determined using estimates as well as the fixed meter reading figures. Where
applicable, this revenue is based on the rates and related restrictions established
by law, the Authority for Electricity and Gas and the corresponding foreign
authorities during the applicable period. Specifically, in 2004 the Authority introduced
an equalization mechanism in order to reduce the impact of timing differences in
setting the prices of energy for sale to the regulated market charged by the Single
Buyer to distributors on a monthly basis, compared with setting the prices that
distributors charge end-users on a quarterly basis;
revenues from the rendering of services are recognized in line with the stage of
completion of the services. Where it is not possible to reliably determine the value
of the revenues, they are recognized in the amount of the costs that it is considered
will be recovered;
connection fees related to the distribution of electricity are treated independently of
any other service connected with the provision of electricity and therefore are
recorded in a single amount upon completion of the connection service.
Financial income and expense

Financial income and expense is recognized on an accruals basis in line with interest
accrued on the net carrying amount of the related financial assets and liabilities using
the effective interest rate method.
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Dividends
Dividends are recognized when the shareholder’s right to receive them is established.
Dividends and interim dividends payable to third parties are recognized as changes in
equity at the date they are approved by the Shareholders’ Meeting and the Board of
Directors, respectively.
Income taxes
Current income taxes for the period are determined using an estimate of taxable
income and in conformity with the relevant tax regulations.
Deferred tax liabilities and assets are calculated on the temporary differences between
the carrying amounts of assets and liabilities in the consolidated financial statements
and their corresponding values recognized for tax purposes on the basis of tax rates in
effect on the date the temporary difference will reverse, which is determined on the
basis of tax rates that are in force or substantively in force at the balance sheet date.
Deferred tax assets are recognized when recovery is probable, i.e. when an entity
expects to have sufficient future taxable income to recover the asset.
The recoverability of deferred tax assets is reviewed at each period-end. Taxes in
respect of components recognized directly in equity are taken directly to equity.
Discontinued operations and non-current assets held for sale

The assets or groups of assets and liabilities whose carrying amount will mainly be
recovered through sale, rather than through ongoing use, are shown separately from
the other balance sheet assets and liabilities. Assets classified as available-for-sale are
measured at the lower of the carrying amount and estimated realizable value, net of
selling costs. Any losses are expensed directly in the income statement. The
corresponding values for the previous period are not reclassified.
Gains or losses on operating assets sold (or being sold) are shown separately in the
income statement, net of the tax effects. The corresponding values for the previous
period are reclassified and reported separately in the income statement, net of tax
effects, for comparative purposes.
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2. Recently issued accounting standards
Standards not yet adopted or not applicable

In 2006, the European Commission endorsed and published the following new
accounting principles, amendments and interpretations to supplement the existing
standards approved and published by the International Accounting Standards Board
(IASB) and the International Financial Reporting Committee (IFRIC).
Amendment to IAS 1 “Presentation of financial statements: disclosures about

capital”: this document requires the disclosure of greater information on the
objectives, policies and processes for managing capital. This standard has already
been adopted by the European Commission and takes effect as of the financial
statements for periods beginning on or after January 1, 2007. The application of
this standard will have no impact on Enel.
“IFRS 7 – Financial instruments: disclosure”: this standard supplements the
standards for the recognition, measurement and presentation in the financial
statements of financial assets and liabilities dealt with under IAS 32 “Financial
instruments: disclosure and presentation” and under IAS 39 “Financial instruments:
recognition and measurement” and supersedes IAS 30 “Disclosures in the financial
statements of banks and similar financial institutions”. IFRS 7 requires additional
disclosure of the significance of financial instruments for a company’s financial
performance and position, as well as a description of management’s objectives,
policies and processes for managing risks associated with financial instruments.
This standard has already been adopted by the European Commission and takes
effect starting as of the financial statements for periods beginning on or after
January 1, 2007. Enel is assessing the impact this new standard may have in terms
of disclosure.
“IFRIC 7 - Applying the restatement approach under IAS 29 Financial reporting in
hyperinflationary economies”; the interpretation, adopted by the European
Commission, is effective for annual periods beginning on or after March 1, 2006. It
establishes that an entity shall apply the provisions of IAS 29 in a reporting period
in which it identifies the existence of hyperinflation in the economy of its functional
currency as if the economy had always been hyperinflationary. The application of
this interpretation will have no significant impact.
“IFRIC 8 – Scope of IFRS 2”: this interpretation clarifies whether IFRS 2 applies to
arrangements where entities cannot specifically identify a portion or the entirety of
the goods or services received. The issue addressed in this interpretation provides
that, in the case in which the identifiable consideration received is less than the fair
value of the equity instruments granted or liability incurred, the unidentifiable
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good/services received (or to be received) shall be valued, at the date of granting,
at an amount equal to the difference between the fair value of the share-based
payment and the fair value of the goods/services received (or to be received). Enel
believes that the application of this interpretation, which has already been adopted
by the European Commission and takes effect starting as of the financial
statements for periods beginning on or after May 1, 2006, will not have a material
impact on its financial statements.
“IFRIC 9 – Reassessment of embedded derivatives”: this interpretation establishes
that the company shall assess whether embedded derivatives are to be recognized
separately from the host contract at the time the company becomes party to the
contract. Subsequent reassessment of the terms of the contract for separate
recognition is prohibited, unless there is a change in the underlying contract that
significantly modifies the related cash flows. Enel believes that the application of
this interpretation, which has already been adopted by the European Commission
and takes effect starting as of the financial statements for periods beginning on or
after June 1, 2006, will not have a material impact on its financial statements.
First-time adoption of applicable standards

Amendment of IAS 19 “Employee benefits”: the primary changes concern the
option for the alternative treatment of actuarial gains and losses. Enel, which
currently applies the corridor approach, has elected to not adopt the option
introduced by this amendment. The amendment is effective as of January 1, 2006.
Amendment of certain paragraphs of IAS 21 “The effects of changes in foreign
exchange rates”, effective for annual periods beginning on or after January 1, 2006,
which modifies the recognition of exchange rate differences associated with monetary
items of a foreign operation and supplements the definition of net investment in a
foreign operation. The application of this standard has no impact on Enel.
Amendments to IAS 39 and to IFRS 4 that provide for changes in the accounting
treatment of guarantees issued. These changes relate primarily to the recognition of
“financial guarantee contracts” other than contracts identified as “insurance contracts”.
These amendments are effective as of January 1, 2006 and their adoption had no
material impact on Enel’s shareholders’ equity and its results for the year.
Amendment to IAS 39 “Financial instruments: recognition and measurement”
permits the designation of forecast intragroup transactions. Specifically, the change
allows, in certain circumstances, the company to designate, as an item hedged in
the consolidated financial statements, a forecast intragroup transaction in a foreign
currency. This amendment also establishes that if the hedge of a forecast
intragroup transaction qualifies for hedge accounting, the gains or losses
recognized directly in equity in accordance with IAS 39 shall be reclassified into
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profit or loss in the same year in which the foreign exchange risk of the hedged
transaction affects consolidated profit or loss. The application of this standard had
no impact on Enel.
Amendment to IAS 39 “Financial instruments: recognition and measurement”
restricts the use of the fair value option. The changes regard the definitions of
financial instruments recognized at fair value through profit and loss, limiting the
designation to specific financial instruments with specified characteristics. This
amendment is effective as of January 1, 2006 and its adoption had no significant
impact on Enel’s shareholders’ equity and its results for the year.
“IFRIC 4 – Determining whether an arrangement contains a lease”: the
interpretation establishes the guidelines for identifying whether, in substance, a
contract constitutes a lease as defined by IAS 17. The amendment is effective as of
January 1, 2006. Specifically, in determining whether a contract is, or contains, a
lease, the company must look to the substance of the arrangement and verify
whether the contract: (a) explicitly or implicitly provides for the use of a specific
asset or assets without which one of the parties to the contract would not be able to
fulfill its contractual obligations; (b) transfers the right to use such assets. The
application of this standard had no significant impact on Enel.
“IFRIC 5 – Rights to interests arising from decommissioning, restoration and
environmental funds”, effective as of January 1, 2006. This interpretation
establishes the criteria for recognizing and measuring contributions to funds
established to decommission assets that have the following characteristics: (a) the
fund assets are owned and managed by a legal entity that is distinct from the
company; (b) the company contributing to the fund has a limited right of access to
fund assets. The contributor separately recognizes its obligation to pay the
decommissioning costs and its interest in the fund. The interest shall be measured
at the lower of: (a) the amount of the decommission obligation recognized; and (b)
the contributor’s share of the fair value of the net assets of the fund attributable to
contributors. Changes in the carrying amount of this right to receive a
reimbursement other than contributions to, and payments from, the fund shall be
recognized in the income statement of the period in which the changes occur. In the
case in which the interest in the fund is such as to allow the company to exercise
control, considerable influence or joint control of the fund, the interest in the fund is
recognized, respectively, as an interest in a subsidiary, associate or joint venture.
The application of this standard had no effect on Enel.
“IFRS 6 – Exploration for and evaluation of mineral resources”, effective for annual
periods beginning on or after January 1, 2006. The standard establishes the
accounting treatment of exploration and evaluation assets. Such assets shall be
classified as tangible or intangible according to the nature of the assets acquired
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and the classification shall be applied consistently. The application of this standard
had no effect on Enel.
3. Risk management
Market risk
As part of its operations, Enel is exposed to different market risks, notably the risk of
changes in interest rates, exchange rates and commodity prices.
To contain this exposure within the limits set at the start of the year as part of its risk
management policies, Enel enters into derivative contracts using instruments available
on the market.
Transactions that qualify for hedge accounting are designated as hedging transactions,
while those that do not qualify for hedge accounting are classified as trading
transactions.
The total ineffective amount recognized in the income statement in 2006 and 2005
came to €1.1 million and €0.9 million respectively.
The fair value is determined using the official prices for instruments traded on regulated
markets. The fair value of instruments not listed on regulated markets is determined
using valuation methods appropriate for each type of financial instrument and market
data as of the close of the financial year (such as interest rates, exchange rates,
commodity prices, volatility), discounting expected future cash flows on the basis of the
market yield curve at the balance sheet date and translating amounts in currencies
other than the euro using year-end exchange rates provided by the European Central
Bank. Where possible, contracts relating to commodities are measured using market
prices related to the same instruments on both regulated and other markets. Contracts
for differences are measured using a model based on the forward prices at the
valuation date for the energy commodity analyzed, estimating developments in the
electricity market in the reference period.
The financial assets and liabilities associated with derivative instruments are classified as:
cash flow hedges, mainly related to hedging the risk of changes in the cash flows
associated with a number of long-term floating-rate loans and certain contracts
entered into by Enel in order to stabilize revenues from the sale of electricity on the
Italian Power Exchange (two-way contracts for differences);
trading derivatives, related to hedging interest and exchange rate risk and
commodity risk but which do not qualify for recognition under IAS 39 as hedges of
specific assets, liabilities, commitments or future transactions.
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The measurement techniques used for the open derivatives positions at the end of the
year are the same as those adopted the previous year. Accordingly, the impact on
profit or loss and shareholders’ equity of such measurement is essentially attributable
to normal market developments.
The notional value of a derivative is the contractual amount on the basis of which
differences are exchanged. This amount can be expressed as a value or a quantity (for
example tons, converted into euro by multiplying the notional amount by the agreed
price). Amounts denominated in currencies other than the euro are translated into euro
at the exchange rate prevailing at the balance-sheet date.
The notional amounts of derivatives reported here do not represent amounts
exchanged between the parties and therefore are not a measure of the Company’s
credit risk exposure.
Interest rate risk

Various types of derivatives are used to reduce the amount of debt exposed to interest
rate fluctuations and to reduce borrowing costs. These include interest rate swaps,
interest rate collars and swaptions, as detailed in the following table:
Millions of euro Notional value

2006 2005
Interest rate swaps 5,132 4,866

Interest rate collars 45 62
Swaptions - 69
Total 5,177 4,997
Interest rate derivatives, specifically interest rate swaps, are used in order to reduce
the amount of debt exposed to changes in interest rates and to reduce the volatility of
borrowing costs. In an interest rate swap, Enel enters into an agreement with a
counterparty to exchange at specified intervals floating-rate interest flows for fixed-rate
interest flows (agreed between the parties), both of which are calculated on the basis of
a notional principal amount.
Interest rate collars are used to reduce the impact of potential increases in interest rates
on its floating-rate debt. Such contracts are normally used when the fixed interest rate
that can be obtained in an interest rate swap is considered too high with respect to Enel’s
expectations for future interest rate developments. In addition, interest rate collars are
also considered appropriate in periods of uncertainty about future interest rate
developments, in order to benefit from any decreases in interest rates. In such cases,
Enel normally uses zero-cost collars, which do not require the payment of a premium.
A swaption gives the holder the right to enter into an interest rate swap with specified
characteristics at an agreed future date. Enel normally acquires the right to pay a fixed
139
rate or sells the right to receive a fixed rate in the case of the exercise of the option in
order to obtain, where the option is exercised, a swap paying a fixed rate lower than
the current market rate.
All these contracts are agreed with a notional amount and expiry date lower than or
equal to that of the underlying financial liability or the expected future cash flows, so
that any change in the fair value and/or expected future cash flows is offset by a
corresponding change in the fair value and/or the expected future cash flows of the
underlying position.
Accordingly, the fair value of the financial derivatives generally reflects the estimated
amount that Enel would have to pay or receive in order to terminate the contracts at the
balance-sheet date. The following table reports the notional amount and fair value of
interest rate derivatives at December 31, 2006 and December 31, 2005.
Millions of euro Notional Fair value Fair value assets Fair value liabilities
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2005
Cash flow hedge derivatives:

Interest rate swaps 4,823 4,196 (79) (261) 37 11 (116) (272)
Interest rate collars 3 62 - - - - - -
Swaptions - 69 - - - - - -
Trading derivatives:
Interest rate swaps 309 670 (26) (54) - 1 (26) (55)
Interest rate collars 42 - - - - - - -
Total interest rate swaps 5,132 4,866 (105) (315) 37 12 (142) (327)
Total interest rate collars 45 62 - - - - - -
Total swaptions - 69 - - - - - -
TOTAL INTEREST RATE

DERIVATIVES 5,177 4,997 (105) (315) 37 12 (142) (327)
The following table reports the expected net financial income/(expense) in respect of
these derivatives in the coming years, as well as the related amount resulting from a
10% increase or decrease in market interest rates. Actual changes in market interest
rates may differ from the hypothetical changes.
Expected net financial income/(expense) in respect of interest rate derivatives in cash flow hedges
Millions of euro
2007 2008 2009 2010 2011 Beyond
Current rates decreased by 10% (28) (49) (17) (16) (15) (66)
Current rates at Dec. 31, 2006 (18) (35) (5) (5) (5) (28)
Current rates increased by 10% (8) (20) 7 6 5 11
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The market value of interest rate derivatives classified in the trading book at December
31, 2006 was a negative €26 million (compared with a negative €54 million at
December 31, 2005).
The following table reports the expected net financial expense in respect of these
derivatives in the coming years, as well as the expected changes in such expense
resulting from a 10% increase or decrease in market interest rates:
Expected net financial income/(expense) in respect of interest rate derivatives in the trading book
Millions of euro
2007 2008 2009 2010 2011 Beyond
Current rates decreased by 10% (7) (6) (6) (3) (3) (10)
Current rates at Dec. 31, 2006 (6) (5) (5) (3) (2) (9)
Current rates increased by 10% (5) (4) (4) (2) (2) (7)
Exchange rate risk

In order to reduce the exchange rate risk on foreign currency assets, liabilities and
expected future cash flows, Enel uses foreign exchange forward and option contracts
in order to hedge cash flows in currencies other than the euro. Payments in foreign
currency are mainly denominated in dollars and Swiss francs. The buy and sell
amounts in such contracts are notional values. Foreign exchange options, which are
negotiated on unregulated markets, give Enel the right or the obligation to acquire or
sell specified amounts of foreign currency at a specified exchange rate at the end of a
given period of time, normally not exceeding one year. The maturity of forward
contracts does not normally exceed twelve months.
At December 31, 2006 Enel had outstanding forward and option contracts totaling
€1,574 million (€1,871 million at December 31, 2005).
Millions of euro Notional value

2006 2005
Forward contracts hedging commodities 875 1,357

Forward contracts hedging commercial paper 377 35
Forward contracts hedging future cash flows 192 212
Other forward contracts 50 194
Options 80 73
Total 1,574 1,871
More specifically, these include:

contracts with a notional value of €1,067 million used to hedge the exchange rate
risk associated with purchases of fuel, imported electricity and expected cash flows
in currencies other than the euro (€1,569 million at December 31, 2005); and
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contracts with a notional value of €377 million used to hedge the exchange rate risk
associated with redemptions of commercial paper issued in currencies other than
the euro (€35 million at December 31, 2005).
These contracts are also normally agreed with a notional amount and expiry date equal
to that of the underlying financial liability or the expected future cash flows, so that any
change in the fair value and/or expected future cash flows of these contracts stemming
from a potential appreciation or depreciation of the euro against other currencies is fully
offset by a corresponding change in the fair value and/or the expected future cash
flows of the underlying position.
At the end of 2006 Enel also had €50 million in outstanding forward contracts (€194
million at December 31, 2005) and €80 million in options (€73 million at December 31,
2005) that were not directly associated with individual exposures subject to exchange
rate risk.
The following table reports the notional amount and fair value of exchange rate
derivatives at December 31, 2006 and December 31, 2005.
Millions of euro Notional Fair value Fair value assets Fair value liabilities
Cash flow hedge

derivatives:
- forwards 26 21 - - - - - -
- forwards 1,468 1,777 (22) (6) 2 9 (24) (15)
- options 80 73 - - - - - -
Total forwards 1,494 1,798 (22) (6) 2 9 (24) (15)

Total options 80 73 - - - - - -
TOTAL EXCHANGE RATE

DERIVATIVES 1,574 1,871 (22) (6) 2 9 (24) (15)
The market value of exchange rate derivatives classified in the trading book at
December 31, 2006 was a negative €22 million (compared with a negative €6 million at
December 31, 2005).
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The following table reports the expected net financial income/(expense) in respect of
these derivatives in the coming years, as well as the expected amount of such expense
resulting from a 10% appreciation or depreciation of the euro against other significant
currencies:
Expected net financial income/(expense) in respect of exchange rate derivatives in the trading book
Millions of euro
2007 2008 2009 2010 2011 Beyond
10% depreciation of the euro 110 - - - - -

Current exchange rates at December 31, 2006 (23) - - - - -
10% appreciation of the euro (130) - - - - -
Commodity risk
Various types of derivatives are used to reduce the exposure to fluctuations in energy
commodity prices, especially swaps and futures.
The exposure to the risk of changes in commodity prices is associated with the
purchase of fuel for power plants and the purchase and sale of gas under indexed
contracts as well as the purchase and sale of electricity at variable prices (indexed
bilateral contracts and sales on Power Exchange).
The exposures on indexed contracts is quantified by breaking down the contracts that
generate exposure into the underlying risk factors.
As regards electricity sold on the Italian Power Exchange, Enel uses two-way contracts
for differences, under which differences are paid to the counterparty if the Single
National Price (SNP) exceeds the strike price and to Enel in the opposite case. No
fixed premium is envisaged for these contracts.
The residual exposure in respect of sales on the Power Exchange not hedged through
two-way contracts for differences is quantified and managed on the basis of an
estimation of generation costs in Italy. The residual positions thus determined are
aggregated on the basis of uniform risk factors that can be hedged in the market.
Enel had already also entered into one-way contracts for differences with the Single
Buyer at the end of 2004. Under these contracts, if the Single National Price (SNP)
exceeds the strike price, Enel pays the difference. The Single Buyer pays Enel a fixed
premium equal to the amount set by the auction for the relevant product.
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The following table reports the notional values and fair values of derivative contracts
relating to commodities at December 31, 2006 and December 31, 2005.
Millions of euro Notional Fair value Fair value asset Fair value liability

- Two-way contracts for differences 1,034 1,372 48 57 48 57 - -
- One-way contracts for differences 3,219 6,266 (123) 43 - 43 (123) -
- swaps on oil-based commodities 581 613 (7) (13) 9 11 (16) (24)
- futures on oil-based commodities 252 291 (2) 16 2 17 (4) (1)
- swaps on gas transmission fees 16 18 (8) (12) - - (8) (12)
- other derivatives on energy 57 107 (6) (1) 1 397 (7) (398)
- embedded derivatives 1,012 - (482) - 58 - (540) -
- options on other commodities - 9 - 2 - 2 - -
TOTAL COMMODITY 6,171 8,676 (580) 92 118 527 (698) (435)

DERIVATIVES
“Two-way contracts for differences” classified as cash flow hedges had a positive fair
value at December 31, 2006 of €48 million (positive €57 million at December 31, 2005).
The following table shows the fair value these two-way contracts for differences would
have in the event of a 10% increase or decrease in the prices of the energy
commodities underlying the model for measuring energy prices on the Italian market.
Two-way contracts for differences refer to the physical positions in the underlying
energy and, therefore, any negative (positive) change in the fair value of the derivative
instrument corresponds to a positive (negative) change in the fair value of the
underlying energy, so the impact on the income statement is equal to zero.
Fair value of two-way contracts for differences in cash flow hedges
Millions of euro
2007
10% decrease 111

Scenario at Dec. 31, 2006 48
10% increase (14)
Derivatives on energy commodities classified as trading derivatives had a net negative

fair value of €17 million (a positive €11 million and a negative €28 million). At
December 31, 2005 the total fair value was a negative €9 million.
The table below shows the fair value that these derivatives would have in the event of a
10% increase and a 10% decrease in the prices of the underlying risk factors.
144
Specifically, the column “Commodity” shows the change relating to derivatives whose
fair value depends on the price of energy commodities, while the “10-year swap rate”
column indicates the change relating to a gas derivative whose fair value is based on
the 10-year interest rate swap (IRS).
Fair value of trading derivatives on energy commodities
Millions of euro Commodity 10-year swap rate Total for 2007
10% decrease (19) (8) (27)

Scenario at Dec. 31, 2006 (9) (8) (17)
10% increase 1 (8) (7)
“One-way contracts for differences” had a net negative fair value at December 31, 2006
of €123 million (positive €43 million at December 31, 2005).
The following table shows the fair value of such one-way contracts for differences, as
well as the value that they would have as a result of a 10% increase and a 10%
decrease in the prices of the energy commodities underlying the model for measuring
energy prices on the Italian market.
Fair value of one-way contracts for differences in trading book
Millions of euro
2007
10% decrease (80)

Scenario at Dec. 31, 2006 (123)
10% increase (167)
Energy derivatives classified as trading derivatives had a net negative fair value at
December 31, 2006 of €6 million (negative €1 million at December 31, 2005).
The following table shows the fair value at December 31, 2006, as well as the changes
in such value as a result of a 10% increase and a 10% decrease in the price scenario.
Specifically, for Italian energy derivatives, the changes are calculated (as with the
approach for the contracts for differences described above) with reference to the
energy commodity prices underlying the model for measuring energy prices on the
Power Exchange.
For energy derivatives on foreign markets, for which forward rates are available, the
changes are calculated based on the price of energy itself.
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Fair value of energy trading derivatives
Millions of euro Italy Foreign Total for 2007
10% decrease (7) (3) (10)

Scenario at Dec. 31, 2006 (3) (3) (6)
10% increase - (4) (4)
Embedded derivatives relate to contracts for the purchase and sale of energy entered
into by Slovenské elektrárne in Slovakia. The net fair value at December 31, 2006
came to a negative €482 million, of which:
a) a positive €58 million relating to an embedded derivative whose fair value is based
upon inflation in the United States, the price of aluminum on the London Metal
Exchange and the Slovak koruna (SKK)/US dollar (USD) exchange rate;
b) a negative €304 million relating to an embedded derivative on the SKK/USD
exchange rate;
c) a negative €236 million relating to a derivative on the price of gas.
The following tables show the fair value at December 31, 2006, as well as the value
expected from a 10% increase and a 10% decrease in the underlying risk factors.
Fair value of embedded derivative a)

Aluminum SKK/USD
Millions of euro US inflation spot price exchange rate
10% decrease 52 32 53
Scenario at Dec. 31, 2006 58 58 58
10% increase 57 82 64
Fair value of embedded derivative b)

SKK/USD
Millions of euro exchange rate
10% decrease (333)

10% increase (275)
Fair value of embedded derivative c)
Millions of euro Gas price
10% decrease (233)

10% increase (240)
146
Credit risk
Enel manages credit risk by operating solely with counterparties considered solvent by
the market, i.e. those with high credit standing, and does not have any concentration of
credit risk.
The credit risk in respect of the derivatives portfolio is considered negligible since
transactions are conducted solely with leading Italian and international banks,
diversifying the exposure among different institutions.
As part of activities related to purchasing fuels for thermal generation and the sale and
distribution of electricity, the distribution of gas and the sale of gas to eligible
customers, Enel grants trade credit to external counterparties. The counterparties
selected are carefully monitored through the assessment of the related credit risk and
the pledge of suitable guarantees and/or security deposits to ensure adequate
protection from default risk.
Enel considers the economic impact in future years of any default by counterparties in
its derivatives positions open at the balance-sheet date to be immaterial given the high
credit standing of such counterparties, the nature of the instruments (under which only
differential flows are exchanged) and the risk diversification achieved by breaking down
positions among the various counterparties.
Liquidity risk
Liquidity risk is managed by the Group Treasury unit at Enel SpA, which ensures
adequate coverage of cash needs (using lines of credit and issues of bonds and
commercial paper) and appropriate management of any excess liquidity.
At December 31, 2006 Enel had committed lines of credit amounting to €5.6 billion, of
which €0.6 billion had been drawn, and uncommitted lines of credit totaling €3.8 billion,
of which €0.5 billion had been drawn.
In addition, Enel Finance International has an outstanding commercial paper program
with a maximum amount of €4 billion, of which about €3.5 billion were available at
December 31, 2006.
4. Changes in the scope of consolidation

The scope of consolidation for 2006 changed with respect to 2005 as a result of the
following main transactions:
the acquisition of controlling investments in Electrica Banat and Electrica Dobrogea
(now Enel Electrica Banat ed Enel Electrica Dobrogea), companies that operate in
electricity distribution and sales in Romania, on April 28, 2005. Accordingly, the
income statement figures for 2005 reflect the consolidation of these companies for
eight months only;
147
sale of 100% of Wind, 62.75% of which was sold on August 11, 2005, and 6.28%
on February 8, 2006, with the remaining 30.97% being transferred to Weather
Investments, again on February 8, 2006, in exchange for 20.9% of the latter;
sale of 43.85% of Terna, which took place in two transactions (13.86% on April 5,
2005 and 29.99% on September 15, 2005), and its deconsolidation on September
15, 2005;
sale of 30% of Enel Unión Fenosa Renovables on May 30, 2006. Following this
sale, the interest in the company fell to 50%, with the Group exercising joint control
over the company together with the other shareholders. As a result, the company is
being consolidated on a proportionate basis as of that date;
acquisition of a 66% interest in Slovenské elektrárne, a company that generates
and sells electricity in Slovakia, on April 28, 2006;
acquisition of the remaining 40% interest in Maritza East III Power Holding on June
14, 2006. Following this transaction, the Group now holds a 73% stake in Enel
Maritza East 3 (formerly Maritza East III Power Company), a Bulgarian generation
company;
acquisition, on June 14, 2006, of a 100% interest in Maritza O&M Holding
Netherlands, a holding company that owns 73% of Enel Operations Bulgaria
(formerly Maritza East 3 Operating Company), which is responsible for the
maintenance of the Maritza East III power station;
acquisition, on June 21, 2006, of a 49.5% interest in Res Holdings, which holds a
100% stake in the Russian firm RusEnergoSbyt (energy trading and sales). Enel
now exercises joint control over the company together with the other shareholders;
as a result, the company is consolidated on a proportionate basis;
acquisition, on July 13, 2006 of 100% of Erelis, which operates in the development
of wind plants in France;
acquisition, on August 1, 2006, of 100% of Hydro Quebec Latin America (now Enel
Panama), which together with our partner Globeleq (a private equity fund) exercises
de facto control over Fortuna, a Panamanian hydro generation company. As a
result, Fortuna is consolidated on a proportionate basis;
acquisition, on October 6, 2006, through the Brazilian subsidiary of Enel Latin
America, Enel Brasil Partecipações, of 100% of 10 companies in the Rede Group
that own 20 mini-hydro plants.
Excluding the sales of Wind and Terna (whose results and capital gain were recognized
as discontinued operations in 2005), the balance sheet effects of the other changes in
the scope of consolidation do not affect the comparability of the figures for the two years
considered. The main effects are shown in the notes to the accounts.
148
It should also be noted that the changes made to the classification of certain transactions
recognized in the income statement in 2006, which are essentially related to the
management of commodity risk, resulted in related reclassifications of the comparative
figures for 2005.
As regards the acquisition of Slovenské elektrárne on April 28, 2006, the allocation of
the cost of the equity investment to the value of the assets and liabilities acquired was
completed in 2006. The residual goodwill recognized can therefore be considered final.
The following tables report the calculation of the goodwill and the balance sheet of the
company at the acquisition date.
Calculation of Slovenské elektrárne goodwill
Millions of euro
Net assets acquired before allocation (1,196)
Fair value adjustments:

Property, plant and equipment 1,943
Net deferred tax liabilities (373)
Financial liabilities 29
Sundry provisions (22)
Other 48
Total adjustments 1,625
Net assets acquired after allocation 429
Enel % holding (66%) 283

(1)
Value of the transaction 844
of which non-current financial assets 2005 (168)
Goodwill 561
(1) Including incidental expenses.
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Balance sheet of Slovenské elektrárne at the acquisition date
Book values before Fair value Book values at
Millions of euro April 28, 2006 adjustments April 28, 2006
Property, plant and equipment 1,928 1,943 3,871

Intangible assets 15 15
Inventories, trade and other receivables 330 (5) 325
Cash and cash equivalents 23 23
Other current and non-current assets 911 (397) 514
Total assets 3,207 1,541 4,748
Shareholders’ equity (789) 1,072 283

Minority interests (407) 553 146
Total shareholders’ equity (1,196) 1,625 429
Trade and other payables 258 258

Financial liabilities and Other current and non-current liabilities 1,600 (106) 1,494
Sundry provisions 2,545 22 2,567
Total shareholders’ equity and liabilities 3,207 1,541 4,748
The contribution of the newly acquired Slovenské elektrárne to Group operating income
came to €198 million.
As regards the other acquisitions made during 2006, the differences between the cost
value of the investments and the assets acquired less liabilities assumed have been
recognized on a provisional basis as goodwill pending more accurate allocation.
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The following reports the calculation of the difference, with the cash flow impact at
December 31, 2006.
Other acquisitions
Millions of euro
Property, plant and equipment 279

Intangible assets 98
Trade receivables and inventories 28
Cash and cash equivalents 47
Other current and non-current assets 16
Total assets 468
Trade payables (19)

Financial liabilities and Other current and non-current liabilities (104)
Sundry and other provisions (13)
Total liabilities (136)
Total net assets acquired 332
Goodwill 158
Negative goodwill (30)
(1)
Value of the transaction 460
CASH FLOW IMPACT AT DECEMBER 31, 2006 460
(1) Including incidental expenses.
The negative goodwill of €30 million is essentially related to the acquisition of an

additional 40% of Maritza East III Power Holding for €26 million.
5. Segment information
The results presented in these notes reflect the new organizational structure
implemented at the end of 2005 and operational since January 1, 2006, which, in
addition to the Domestic Sales Division, the Domestic Generation and Energy
Management Division, the Domestic Infrastructure and Networks Division, saw the
creation of an International Division that includes all the Group’s resources devoted to
generation and distribution activities in the electricity and gas sectors abroad.
For the purposes of providing comparable figures, the data for 2005 have been
reallocated to the Divisions on the basis of the new organizational arrangements. The
figures for Transmission Networks and Telecommunications following the
deconsolidation of Wind and Terna in the 2nd Half of 2005 are reported in the
reference year as discontinued operations.
Following the transfer of the “large electricity users” unit (customers with annual
consumption of more than 100 million kWh) from Enel Trade to Enel Energia, the 2005
figures for the unit were reallocated from the Domestic Generation and Energy
Management Division to the Domestic Sales Division for comparative purposes.
151
Segment information for 2006 and 2005
Continuing operations
Domestic Domestic
Generat. and Infrastruc. Services Eliminations
Domestic Energy and Parent and Other and
Millions of euro Sales Manag. Networks Internat. Company Activities adjustments Total TOTAL
Revenues from third parties 20,981 12,694 906 3,056 891 267 (282) 38,513 38,513
Revenues from other
segments 127 2,967 4,801 12 287 894 (9,088) - -
Total revenues 21,108 15,661 5,707 3,068 1,178 1,161 (9,370) 38,513 38,513
commodity risk management 4 (705) - 91 (4) - - (614) (614)
Gross operating margin 175 3,149 3,418 918 177 179 3 8,019 8,019
Income from equity exchange
transaction - - - - 263 - - 263 263
Depreciation and
amortization 44 980 826 387 17 90 - 2,344 2,344
Impairment losses 129 (28) 3 12 - 3 - 119 119
Operating income 2 2,197 2,589 519 423 86 3 5,819 5,819
Net financial
equity investments
equity method - - - - - - - (651) (651)
Income taxes - - - - - - - 2,067 2,067
Net income (Group and
minority interests) - - - - - - - 3,101 3,101
Operating assets 6,948 16,752 16,875 10,008 1,013 1,771 (3,352) 50,015 50,015
Operating liabilities 6,272 4,019 4,042 4,037 1,275 1,128 (2,884) 17,889 17,889
Capital expenditure 56 897 1,459 467 13 71 - 2,963 2,963
(1) Segment revenues include both revenues from third parties and revenue flows between the segments. An analogous approach was taken for other income and costs for the year.
152
Continuing operations Discontinued operations

Domestic Domestic
Generat. and Infrastruc. Services Eliminations Eliminations
Domestic Energy and Parent and Other and Transm. and
Millions of euro Sales Manag. Networks Internat. Company Activities adjustments Total Networks TLC. adjustments Total TOTAL
Revenues from third parties 19,155 10,648 837 1,856 886 440 (35) 33,787 711 2,604 (62) 3,253 37,040
Revenues from other
segments 332 2,347 4,695 2 232 1,301 (8,909) - 29 144 (173) - -
Total revenues 19,487 12,995 5,532 1,858 1,118 1,741 (8,944) 33,787 740 2,748 (235) 3,253 37,040
commodity risk management (26) 326 - (14) (14) - - 272 - - - - 272
Gross operating margin 152 3,407 3,398 485 67 315 (79) 7,745 524 903 (1) 1,426 9,171
Depreciation and
amortization 25 982 769 173 14 93 - 2,056 118 695 - 813 2,869
Impairment losses 115 27 1 5 - 3 - 151 - 41 - 41 192
Operating income 12 2,398 2,628 307 53 219 (79) 5,538 406 167 (1) 572 6,110
Net financial
equity investments
equity method - - - - - - - (744) - - - (240) (984)
Income taxes - - - - - - - 1,934 - - - 213 2,147
Gains on disposal of assets 1,153 1,153
Net income (Group and
minority interests) - - - - - - - 2,860 - - - 1,272 4,132
Operating assets 6,465 16,468 15,708 4,282 1,263 2,945 (3,280) 43,851 - - - - 43,851
Operating liabilities 5,289 3,841 3,567 813 1,604 2,392 (3,137) 14,369 - - - - 14,369
Capital expenditure 53 798 1,570 299 11 98 - 2,829 142 286 - 428 3,257
(1) Segment revenues include both revenues from third parties and revenue flows between the segments. An analogous approach was taken for other income and costs for the year.
153
The following table reconciles segment assets and liabilities and the consolidated
figures.
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005
Total assets 54,500 50,502

Financial assets and cash and cash equivalents 2,107 3,203
Tax assets 2,378 3,448
Segment assets 50,015 43,851

- of which:
Total liabilities 35,475 31,086

Financial liabilities and loans 14,661 13,819
Tax liabilities 2,925 2,898
Segment liabilities 17,889 14,369

- of which:
International 4,037 813
154
Information on the Consolidated Income Statement
Revenues
6.a Revenues from sales and services – €37,497 million
Millions of euro
2006 2005 2006-2005
Revenues from the sale and transport of electricity and contributions

from Electricity Equalization Fund 34,231 29,008 5,223
Revenues from the sale and transport of natural gas to end-users 1,695 1,556 139
Revenues from fuel sales 413 446 (33)
Connection fees for the electricity and gas networks 617 656 (39)
Revenues for contract work in progress 138 290 (152)
Other sales and services 403 414 (11)
Total 37,497 32,370 5,127
The change in “Revenues from the sale and transport of electricity and contributions from
Electricity Equalization Fund” for 2006 with respect to 2005 is mainly attributable to a rise
of €1,924 million in revenues from the transport and sale of electricity on the free and
regulated markets. The increase is essentially due to higher unit prices and sales
volumes on the free market as well as an increase in rate revenues for the regulated
market, essentially related to the share allocated to cover higher generation costs. The
figures for the period also reflect a €719 million increase in revenues from sales to
resellers and revenues of €396 million for the remuneration of ancillary services. The
increase in sales and transport is also linked to the rise in revenues posted by the Group
abroad (€2,345 million), mainly attributable to €1,022 million in energy trading and to
generation and distribution by foreign companies (of which €1,153 million related to the
consolidation of Slovenské elektrárne, RusEnergoSbyt and Enel Panama). These
increases were partially offset by lower contributions from the Electricity Equalization
Fund related to the recognition in 2005 of €100 million in revenues connected with the
recovery of charges for green certificates incurred in 2002 and 2003.
The increase in “Revenues from the sale and transport of natural gas to end-users” is
essentially a reflection of the increase in the raw material component of gas rates.
“Revenues from fuel sales” decreased by €33 million due to a decrease in the sale of
fuels other than natural gas, which was partially offset by greater sales of natural gas.
“Revenues for contract work in progress” fell by €152 million as a result of reduced
engineering and construction activities carried out for external parties.
155
The table below gives a breakdown of revenues by geographical area:
Millions of euro
2006 2005
Italy 32,389 30,563

Europe 4,525 1,656
Americas 180 117
Middle East 22 27
Other 381 7
Total 37,497 32,370
6.b Other revenues – €1,016 million
Millions of euro
2006 2005 2006-2005
Prior-year regulatory items - 338 (338)

Reimbursement of stranded costs for Nigerian gas 154 158 (4)
Gains on sale of equity investments 90 131 (41)
Gains on sale of property, plant and equipment and intangible assets 22 45 (23)
Bonus for service continuity 194 115 79
Other 556 630 (74)
Total 1,016 1,417 (401)
“Prior-year regulatory items” for 2005 include reimbursements for reserve services
provided to the ISO (GRTN, now the Electricity Services Operator) for the period from
2002 through March 31, 2004.
“Gains on sale of equity investments” realized in 2006 include €85 million from the sale
of the distribution and sales networks of a number of municipalities in the Province of
Modena.
The “Bonus for service continuity” for 2006, totaling €194 million, regards the bonus
payable to Enel Distribuzione and Deval for improvements in service continuity
recognized during the period, as well as the supplement to the amount recognized
during the previous year for continuity improvements achieved in 2005. The
corresponding income recognized in the previous year totaled €115 million.
7. Income from equity exchange transaction – €263 million

The item regards the gain generated by the sale of Wind, in which 30.97% of the
shares of Wind were exchanged for 20.9% of the share capital of Weather.
156
Costs
8.a Raw materials and consumables – €23,469 million
Millions of euro
2006 2005 2006-2005
Electricity purchases 17,082 14,321 2,761

Fuel and gas 5,637 5,514 123
Materials 750 798 (48)
Total 23,469 20,633 2,836

- of which capitalized (586) (665) 79
The increase in costs for electricity purchases reflects the change in the scope of
consolidation of foreign firms, as well as the increase in average electricity costs.
These factors were only partially offset by a reduction in quantities purchased in Italy,
essentially related to a decrease in the volume of energy sales on the regulated
market.
The higher costs of fuel and gas are mainly attributable to the increase in the average
purchase price.
8.b Services – €3,477 million
Millions of euro
2006 2005 2006-2005
Electricity and gas wheeling 1,342 1,048 294

Maintenance and repairs 444 395 49
Telephone and postal 289 260 29
Communication services 62 62 -
Leases and rentals 425 387 38
Other 915 905 10
Total 3,477 3,057 420
Costs for services rose by €420 million, mainly as a result of the increase in electricity
and gas wheeling costs, largely in respect of activity on the free market.
157
8.c Personnel – €3,210 million
Millions of euro
2006 2005 2006-2005
Wages and salaries 1,995 1,957 38

Social security contributions 568 529 39
Termination benefits 64 111 (47)
Other costs 583 165 418
Total 3,210 2,762 448

- of which capitalized (403) (384) (19)
Personnel costs for 2006 rose by €448 million, which reflects the charge for the year for
early retirement incentives (€487 million). Excluding this component and the increase
arising from the change in the scope of consolidation, personnel costs, taking account
of the charge in respect of the renewal of the national collective bargaining agreement
for the electricity and gas industry, declined by €73 million, while the average number
of employees for the period, after adjusting for the changes in the scope of
consolidation, fell from 53,362 for 2005 to 50,804 for 2006.
The figure includes the charge recognized for 2006 related to defined-contribution
plans, equal to €42 million (€49 million in 2005).
The table below shows the average number of employees by category, compared with
the previous year, and the actual number of employees at December 31, 2006.
Average number Headcount

2006 2005 2006-2005 at Dec. 31, 2006
Senior managers 692 618 74 691

Middle managers 4,678 4,144 534 4,900
Office staff 29,918 29,231 687 30,540
Workers 21,300 19,369 1,931 22,417
Total continuing operations 56,588 53,362 3,226 58,548
Discontinued operations - 6,722 (6,722) -
TOTAL 56,588 60,084 (3,496) 58,548
158
8.d Depreciation, amortization and impairment losses – €2,463 million
Millions of euro
2006 2005 2006-2005
Depreciation 2,154 1,918 236

Amortization 190 138 52
Impairment losses 119 151 (32)
Total 2,463 2,207 256
The rise of €256 million is essentially attributable to the increase in the depreciation of
property, plant and equipment, mainly due to the inclusion of Slovenské elektrárne and
Enel Panama in the scope of consolidation (€189 million).
8.e Other operating expenses – €713 million
Millions of euro
2006 2005 2006-2005
Provisions for risks and charges 98 212 (114)

Purchase of green certificates 73 119 (46)
Charges for CO2 emissions 84 228 (144)
Taxes and duties 159 144 15
Other 299 208 91
Total 713 911 (198)
The decrease in “Other operating expenses” essentially reflects the decline in charges
for emissions of €144 million. The decrease is associated with the effect of the
alignment in 2006 of the value of the allowance deficit for 2005 (10.7 million metric
tons) with the prices of the allowances acquired in 2006, which were significantly lower
than the market prices used for measurement at December 31, 2005. This positive
effect was partially offset by the cost incurred to acquire part of the allowances to cover
the deficit for the year and the measurement at year-end prices of the deficit not yet
covered (1.3 million metric tons).
8.f Capitalized costs – €(989) million

“Capitalized costs” include €403 million in personnel costs and €586 million in materials
costs (compared with €384 million and €665 million, respectively, for 2005). The
decrease in the period relates to the decline in in-house plant construction by the
Domestic Infrastructure and Networks Division.
159
9. Net income/(charges) from commodity risk management – €(614) million
Net charges from commodity risk management include €622 million from contracts for
differences and derive essentially from a change in developments in prices for the
purchase of electricity on the pool market and the prices of the products used as
benchmarks in the contracts for differences.
Millions of euro
2006 2005 2006-2005
Income
Unrealized on contracts for differences - 43 (43)
Unrealized on other contracts 16 9 7
Total unrealized income 16 52 (36)
Realized on contracts for differences - 289 (289)

Realized on other contracts 76 98 (22)
Total realized income 76 387 (311)
Total income 92 439 (347)
Charges
Unrealized on contracts for differences (103) - (103)
Unrealized on other contracts (42) (13) (29)
Total unrealized charges (145) (13) (132)
Realized on contracts for differences (519) - (519)

Realized on other contracts (42) (154) 112
Total realized charges (561) (154) (407)
Total charges (706) (167) (539)
NET INCOME/(CHARGES) FROM COMMODITY RISK MANAGEMENT (614) 272 (886)
160
10. Financial income/(expense) – €(647) million
Millions of euro
2006 2005 2006-2005
Financial income:
- interest and other income from non-current financial assets 8 29 (21)
- foreign exchange gains 165 23 142
- income from derivative instruments 85 68 17
- other income 233 99 134
Total income 491 219 272
Financial expense:
- interest and other charges on financial debt (635) (686) 51
- foreign exchange losses (82) (52) (30)
- expense on derivative instruments (169) (94) (75)
- accretion of post-employment and other employee benefits (108) (112) 4
- accretion of other provisions (159) - (159)
Total financial expense (1,153) (944) (209)
Total financial income/(expense) (662) (725) 63
Income/(expense) from equity investments:

- income from equity investments 22 11 11
- expense on equity investments (7) - (7)
Total income/(expense) from equity investments 15 11 4
TOTAL (647) (714) 67
Net financial expense excluding net income from equity investments amounted to €662
million, down €63 million on the previous year. This reflected the benefit of Enel’s
financial strategy, which in a context of sharply rising market interest rates, especially
short-term rates, was focused on extending the average maturity of its debt and
reducing the floating rate component.
These developments, associated with a significant reduction in outstanding debt,
contributed to the decline in the financial expense on the debt.
The decline also reflected the recognition in 2006 of the right to reimbursement of
registration fees paid on bonds issued between 1976 and 1984.
These effects were partially offset by an increase in net financial expense due to the
consolidation of Slovenské elektrárne, to which the increase of €159 million in the
accretion of provisions for risks and charges is also largely attributable.
161
11. Share of income/(expense) from investments accounted for using the equity method –
€(4) million
Millions of euro
2006 2005 2006-2005
Income from associates 4 7 (3)

Expense on associates (8) (37) 29
Total (4) (30) 26
Expense in respect of investments accounted for using the equity method came to €8
million in 2006. They essentially reflect the measurement of the 26.1% stake held in
Weather Investments until the sale date. The expense for 2005, totaling €37 million,
concerned the measurement using the equity method of the investment in Wind
Telecomunicazioni (37.25%), taking account of the gain that emerged from the fair
value measurement of call option envisaged in the disposal agreement, which was
exercised in February 2006.
12. Income taxes – €2,067 million
Millions of euro
2006 2005 2006-2005
Current taxes 1,657 1,398 259

Income tax adjustments relating to prior years (5) 14 (19)
Deferred tax liabilities 47 277 (230)
Deferred tax assets 368 245 123
Total 2,067 1,934 133
The tax charge for 2006 amounts to an estimated €2,067 million, equal to 40.0% of
taxable income, compared with 40.3% in 2005. Foreign taxes in the year totaled €99
million (€27 million in 2005).
162
The table below reconciles the theoretical tax rate with the effective rate.
Millions of euro
2006 2005
Income before taxes 5,168 4,794

Theoretical tax due calculated as 33% of pre-tax income 1,705 33.0% 1,582 33.0%
Permanent differences and minor items 13 0.3% (12) -0.3%
Difference on estimated income taxes from prior years (5) -0.1% 14 0.3%
IRAP 354 6.8% 350 7.3%
Total 2,067 40.0% 1,934 40.3%
13. Discontinued operations – €0 million

Following the disposal of equity investments in Wind and Terna, which took place on
August 11 and September 15, 2005, respectively, these entities were deconsolidated
as from those dates and the financial performance achieved up to the disposal date is
reported under discontinued operations.
Similarly, the capital gain achieved in the 2nd Quarter of 2005 from the sale of 13.86%
of Terna was recognized under discontinued operations.
The income components contributing to the total of discontinued operations are shown
in the following table.
Millions of euro
2006 2005
Operating income - 572

Net financial expense - (240)
Income taxes - (213)
Net income before capital gains - 119
Gains on disposal of assets - 1,153
NET INCOME ON DISCONTINUED OPERATIONS - 1,272
163
Information on the Consolidated Balance Sheet
Assets
Non-current assets
14. Property, plant and equipment – €34,846 million

Changes in property, plant and equipment for 2005 and 2006 are shown below:
Industrial and Assets under

Plant and commercial Other Leased Leasehold construction
Millions of euro Land Buildings machinery equipment assets assets improvements and advances Total
Cost 351 6,684 75,753 494 1,117 - 279 2,073 86,751

Accumulated depreciation - (3,041) (45,630) (393) (794) - (191) - (50,049)
Balance at Dec. 31, 2004 351 3,643 30,123 101 323 - 88 2,073 36,702
Investments 1 64 1,743 16 56 - 13 1,144 3,037

Assets entering service 2 48 766 1 15 - 10 (842) -
Depreciation (1) - (210) (2,191) (24) (101) - (35) - (2,561)
Impairment losses - - - - - - - - -
Change in scope of consolidation (16) (325) (6,329) (10) (119) - (59) (600) (7,458)
Exchange rate gains/ (losses) 1 - 245 - - - - 1 247
Ordinary disposals and other changes 52 133 (211) (4) (23) - 10 264 221
Total changes 40 (290) (5,977) (21) (172) - (61) (33) (6,514)
Cost 391 6,435 64,698 358 664 - 65 2,040 74,651

Accumulated depreciation - (3,082) (40,552) (278) (513) - (38) - (44,463)
Balance at Dec. 31, 2005 391 3,353 24,146 80 151 - 27 2,040 30,188
Investments 1 56 1,415 17 71 - 11 1,188 2,759

Assets entering service 1 58 612 - 31 - 17 (719) -
Depreciation - (247) (1,790) (16) (67) (21) (13) - (2,154)
Impairment losses - - (6) - - - - - (6)
Change in scope of consolidation 12 1,106 2,257 19 1 225 - 357 3,977
Exchange rate gains/ (losses) - 94 147 3 - 18 - 33 295
Ordinary disposals and other changes (16) (14) (163) (3) (7) 3 - (13) (213)
Total changes (2) 1,053 2,472 20 29 225 15 846 4,658
Cost 389 8,021 69,355 404 673 292 119 2,886 82,139
Accumulated depreciation - (3,615) (42,737) (304) (493) (67) (77) - (47,293)
Balance at Dec. 31, 2006 389 4,406 26,618 100 180 225 42 2,886 34,846
(1) Includes €643 million in respect of Telecommunication and Transmission Networks Divisions until date of deconsolidation.
“Plant and equipment” includes assets to be relinquished with a net book value of
€2,214 million, mainly hydroelectric power plants (€2,171 million, of which €353 million
refers to the plant of the Spanish companies).
“Leased assets” mainly regard the sale and lease back agreement for the V1 nuclear
power plant at Jaslovske Bohunice and the hydroelectric plant at Gabcikovo, the
signing of which was a necessary condition for the start of the privatization of the
Slovakian electricity system. In particular, the lease contract for the V1 plant covers the
entire remaining useful life of the asset and the period between the end of generation
and the start of the decommissioning process, while that for the Gabcikovo plant has a
30-year term as from April 2006.
The following table reports the minimum lease payments and the related present value.
Millions of euro Minimum lease payments Present value
2007 14 11
2008-2012 31 14
After 2012 99 64
Total 144 89
Changes in the scope of consolidation in 2006 relate to the following transactions:

the acquisition of Slovenské elektrárne (up €3,871 million);
the acquisition of Enel Panama (up €159 million);
the acquisition of the Brazilian companies of the Rede Group (up €79 million);
the acquisition of companies in the Gas area (up €41 million);
the partial deconsolidation of Enel Unión Fenosa Renovables (down €156 million);
the sale of Carbones Colombianos del Cerrejón (down €17 million).
In 2005 the item mainly regarded the deconsolidation of the Telecommunications and
Transmission Networks Divisions.
Depreciation for 2005 included amounts related to Telecommunications and

Transmission Networks Divisions until deconsolidation in the amount of €643 million.
Excluding this effect, this item increased by €236 million due essentially to the
acquisition of Slovenské elektrárne and Enel Panama for a total of €189 million.
The variation in ordinary disposals and other changes was affected by the
reclassification in 2005 of materials to be used in the construction and maintenance of
the distribution networks, which was previously classified as inventory, as well as the
transfer of land and buildings to Dalmazia Trieste following the spin-off of the
Immobiliare Foro Bonaparte real estate firm in 2005.
165
The following tables report the net values at December 31, 2006 and December 31,
2005 for property, plant and equipment based on the use of the assets.
Millions of euro
2006 2005
(1)
Power plants:
- thermal 7,124 6,521
- hydro 4,601 4,422
- geothermal 313 633
- nuclear 1,831 -
- alternative energy resources 323 566
Total power plants 14,192 12,142
Electricity distribution networks 12,827 12,282

Gas distribution networks 1,585 1,626
Buildings for primary and secondary transformer stations 691 674
(2)
Buildings for office, warehouse and other uses 1,895 872
Equipment and other assets 770 552
Total assets in use 31,960 28,148
Assets under construction and advances 2,886 2,040
TOTAL 34,846 30,188
(1) The values also include industrial land and buildings.

(2) The values include non-industrial buildings (offices, warehouses, parking facilities, etc.), buildings for civil use and non-appurtenant land.
The table below summarizes capital expenditure in 2006 by category. The total of
€2,759 million declined by €278 million from 2005, mainly as a result of the removal of
Wind and Terna from the scope of consolidation.
Millions of euro
2006 2005
Power plants:
- thermal 766 570
- hydro 157 206
- geothermal 79 84
- nuclear 57 -
- alternative energy resources 115 130
Total power plants 1,174 990
Transport lines and transformer stations - 133

Electricity distribution networks 1,324 1,381
Gas distribution networks 88 70
Telecommunication networks - 251
Land, buildings and other assets and equipment 173 212
TOTAL 2,759 3,037
166
Investments in power plants totaled €1,174 million, an increase of €184 million over the
previous year. The expenditure primarily concerned works for the transformation of
thermal plants and plant upgrading and repowering to enhance safety and
environmental performance (upgrading of hydraulic plant, environmental impact work,
etc.), as well as the effect of the consolidation of Slovenské elektrárne.
Investments in the electricity distribution network totaled €1,324 million, down €57
million from the previous year, due primarily to investments related to the digital
metering project, which will soon be completed. In the year, about 2.9 million traditional
meters were replaced (some 6.2 million in 2005). Since the program began a total of 30
million meters have been replaced.
In the absence of indications concerning events that might have reduced the value of
the assets, no impairment test was conducted.
15. Intangible assets – €2,982 million

Changes in intangible assets for 2005 and 2006 are shown below:
Concessions,
Industrial patents licenses, Assets under
Development and intellectual trademarks and development
Millions of euro costs property rights similar rights Other and advances Goodwill Total
Balance at Dec. 31, 2004 6 411 2,526 245 174 6,709 10,071
Investments - 72 36 12 97 3 220
Assets entering service - 59 - 9 (68) - -
Exchange rate differences - - 1 9 - 23 33
Changes in scope of consolidation - (245) (2,410) 26 (70) (5,120) (7,819)
Amortization
(1) - (149) (96) (63) - - (308)
Impairment losses - - - - - - -
Other changes (6) (15) 20 27 (1) (40) (15)
Total changes (6) (278) (2,449) 20 (42) (5,134) (7,889)
Balance at Dec. 31, 2005 - 133 77 265 132 1,575 2,182
Investments 5 51 15 35 98 - 204
Assets entering service - 69 - 10 (79) - -
Exchange rate differences - 1 - (11) 1 29 20
Changes in scope of consolidation - 8 12 77 9 670 776
Amortization (2) (94) (15) (79) - - (190)
Impairment losses - - - - - (3) (3)
Other changes 32 (3) (2) (21) (13) - (7)
Total changes 35 32 10 11 16 696 800
Cost 42 482 128 759 148 2,271 3,830

Accumulated amortization 7 317 41 483 - - 848
Balance at Dec. 31, 2006 35 165 87 276 148 2,271 2,982
(1) Includes €170 million in respect of Telecommunications and Transmission Networks Divisions until date of deconsolidation.
167
The individual items making up intangible assets are commented on below.
“Industrial patents and intellectual property rights” relate mainly to costs incurred in
purchasing software and open-ended software licenses. The most important
applications relate to invoicing and customer management, the development of Internet
portals and the management of company systems. Amortization is calculated on a
straight-line basis over the item’s residual useful life (on average between three and
five years).
“Concessions, licenses, trademarks and similar rights” include expenses incurred by

the gas companies and the foreign electricity distribution companies to build up their
customer base. Amortization is calculated on a straight-line basis over the term of the
average period of the relationship with customers or of the concessions.
“Goodwill” amounted to €2,271 million, an increase of €696 million over the previous
year.
Changes in scope Exchange rate Impairment

Millions of euro of consolidation differences losses
at Dec. 31, 2005 at Dec. 31, 2006
Enel Viesgo Generación 657 - - - 657

Enel Rete Gas 4 4
Enel Energia (formerly Enel Gas) 579 - - - 579
Enel Unión Fenosa Renovables 131 (49) - - 82
Enel North America 85 - (9) (1) 75
Enel Latin America 73 - (7) - 66
Electra de Viesgo Distribución 24 - - - 24
Enel Maritza East 3 (formerly Maritza
East III Power Company) 15 - - - 15
Wisco 7 - - (2) 5
Slovenské elektrárne - 561 48 - 609
RusEnergoSbyt - 80 (1) - 79
Enel Panama - 62 (2) - 60
Erelis - 14 - - 14
Enel Operations Bulgaria (formerly
Maritza East 3 Operating Company) - 2 - - 2
Total 1,575 670 29 (3) 2,271
The change in the scope of consolidation concerns the acquisition of 66% of Slovenské
elektrárne (€561 million), 100% of the Russian company RusEnergoSbyt (€80 million)
through the acquisition of 49.5% of its direct parent Res Holdings, 100% of Enel
Panama (€62 million), 100% of Erelis (€14 million), and 73% of Enel Operations
Bulgaria (formerly Maritza East 3 Operating Company, €2 million), net of the sale of a
30% stake in Enel Unión Fenosa Renovables (down €49 million).
168
The allocation of the cost of the investment in Slovenské elektrárne to the current value
of the assets and liabilities acquired was completed at the end of 2006. Accordingly,
the goodwill recognized can be considered final and subject to impairment tests, as
described below. As regards the other acquisitions made during 2006, the differences
between the cost value of the investments and the assets acquired less liabilities
assumed have been recognized on a provisional basis as goodwill pending more
accurate allocation.
The recoverable value of the goodwill recognized was estimated using discounted cash
flow and dividend discount models, which involve estimating future cash flows and
applying an appropriate discount rate in order to determine an asset’s value in use.
More specifically, the cash flows concern an explicit period selected in line with the
average useful life of the assets or the duration of the concessions. In cases in which it
was not possible to estimate cash flows reliably for the entire useful life of the assets, a
residual amount was calculated as a perpetuity at a growth rate of zero or equal to
inflation as deemed appropriate for the country involved. The value in use calculated as
described above was found to be greater than the amount recognized on the balance
sheet. The sensitivity analysis used in the analysis did not point to significant impacts
on the results of the measurements themselves and consequently on the differences
found.
The table below reports the balance of goodwill according to the company to which the
cash generating unit belongs, along with the discount rates applied and the time
horizon over which the expected cash flows have been discounted.
Discount rate
Explicit
period of
(1) (2) (3)
Millions of euro Amount Tax rate Growth rate WACC Ke cash flows
at Dec. 31, 2006
Enel Viesgo Generación 657 30% no terminal value 6.9% 26 years

Electra de Viesgo Distribución 24 30% 1.0% 6.0% 11 years
Enel Rete Gas 4 42% 0% 6.0% 3 years
Enel Energia (formerly Enel Gas) 579 38% 0% 7.1% 5 years
Enel North America 75 40.4% 2.0% 6.5% 10 years
Enel Latin America 66 28.2% 2.0% 9.9% 10 years
Enel Unión Fenosa Renovables 82 30% no terminal value 8.8% 20 years
Enel Maritza East 3 (formerly Maritza
East III Power Company) 15 10% no terminal value 11.4% 18 years
Wisco 5 40% 0% 8.0% 11 years
Slovenské elektrárne 609 19% no terminal value 8.5% 34 years
(1) Perpetual growth rate of cash flows after explicit period.

(2) WACC represents the weighted average capital cost.
(3) Ke is the opportunity cost for the shareholder for the investment in risk capital.
169
16. Deferred tax assets – €1,554 million
Changes in “Deferred tax assets”, grouped by type of temporary difference and
determined using current tax rates, are shown below.
Increase/(Decrease) Changes
taken to income Other in scope of
Millions of euro statement changes consolidation
at Dec. 31, 2005 at Dec. 31, 2006
Nature of the temporary differences:

- impairment of property, plant and
equipment and intangible assets 68 (9) (2) - 57
- accruals to provisions for risks and
charges and impairment losses with
deferred deductibility 567 (192) - 191 566
- tax losses carried forward 125 (60) - - 65
- measurement of financial assets 149 (61) (45) - 43
- other items 869 (46) - - 823
Total 1,778 (368) (47) 191 1,554
At December 31, 2006, deferred tax assets totaled €1,554 million, a decrease of €224
million compared with December 31, 2005.
The change is essentially ascribable to the recognition in the income statement of
amounts deductible for the period (€368 million), mainly referring to the item provisions
for risks and charges and prior impairments of equity investments on which tax
deductibility is deferred over more than one year.
The change in the scope of consolidation is related primarily to Slovenské elektrárne.
No deferred tax assets were recorded in relation to prior tax losses of €764 million,
mainly regarding two holding companies located in the Netherlands and Luxembourg
(€649 million), because the tax laws in force in the countries in question do not treat the
expected income (dividends) of the companies as taxable.
170
17. Equity investments accounted for using the equity method – €56 million
Equity investments in associated companies accounted for using the equity method are
as follows:
Capital Income Other

Millions of euro % holding increases Sales effect changes % holding
at Dec. 31, 2005 at Dec. 31, 2006
Wind Telecomunicazioni 1,728 37.2% - (328) 263 (1,663) - -

Weather Investments - - - (1,962) (6) 1,968 - -
Gesam 14 40.0% - (18) 4 - - -
Idrosicilia 9 40.0% - - - - 9 40.0%
Cesi 7 25.9% - - - - 7 25.9%
Compagnia Porto di Civitavecchia 9 25.0% 2 - - (4) 7 25.0%
Aes Distribuidores Salvadoreños 7 20.0% - - - (2) 5 20.0%
Other 23 - - (2) 4 3 28 -
Total 1,797 2 (2,310) 265 302 56
The changes for the year in the equity investments in Wind and Weather Investments
are the result of the completion of the sale of Wind. Specifically, Enel transferred 6.28%
of Wind’s share capital to a subsidiary of Weather after Weather exercised a call option
envisaged in the May 2005 agreement between the parties. Enel also transferred its
remaining 30.97% of Wind shares to Weather in exchange for 20.9% of the share
capital of Weather. The exchange generated a gain of €263 million. Including the 5.2%
of Weather acquired in August 2005 during the first phase of the transaction and
classified at December 31, 2005 under non-current financial assets, Enel’s total holding
in the company amounted to 26.1%. On December 21, 2006, Enel sold the holding for
a total of €1,962 million, of which €1,000 million were paid on that date, with the
remainder deferred on an interest-bearing basis for 18 months and classified under
other non-current financial assets.
The main income statement and balance sheet data for the principal equity
investments in associates are reported in the following table.
Net Net
Millions of euro Assets Liabilities Revenues income/(loss) Assets Liabilities Revenues income/(loss)
at Dec. 31, 2006 at Dec. 31, 2005
Idrosicilia 23 1 - 1 23 1 - 1
Cesi 128 101 80 1 159 129 125 1
Compagnia Porto di Civitavecchia 23 7 - (2) 2 4 - (3)
Aes Distribuidores Salvadoreños 85 57 5 - 104 67 9 5
Other companies 166 114 52 6 119 103 14 4
171
18. Non-current financial assets – €1,494 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Equity investments in other companies 367 594 (227)

Advance paid on the acquisition of Slovenské elektrárne - 168 (168)
Receivables due from associates and other equity investments - 34 (34)
Other securities designated at fair value through profit or loss 114 - 114
Other receivables:
- financial receivables due from financing entities 14 27 (13)
- derivative contracts 37 11 26
- other items 962 2 960
Total other receivables 1,013 40 973
TOTAL 1,494 836 658
As regards “Equity investments in other companies”, the fair value of publicly listed
companies was determined with reference to the market value of their shares at the
end of the period, whereas the fair value of unlisted companies was determined on the
basis of what is felt to be a reliable valuation of their significant balance sheet items.
Millions of euro % holding % holding

at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Weather Investments - - 286 5.20% (286)

Terna 262 5.12% 213 5.12% 49
Red Electrica de España 44 1.00% 35 1.00% 9
LaGeo 25 12.50% 25 12.50% 0
Echelon 18 7.67% 20 7.54% (2)
Tri Alpha Energy 7 6.18% 7 6.74% 0
Other 11 8 3
Total 367 594 (227)
The change in 2006 is connected with the Enel-Weather transaction described in the
section concerning equity investments accounted for using the equity method.
Non-current financial assets at December 31, 2005, included the advance paid for the
purchase of 66% of the share capital of Slovenské elektrárne. This acquisition was
finalized in the 2nd Quarter of 2006.
“Other securities designated at fair value through profit or loss” are financial
investments in asset management funds.
172
The increase in “Other items” essentially regards the remaining receivable of €962
million in respect of the sale of the 26.1% stake in Weather.
The table below reports the carrying amount and the fair value of long-term financial
receivables (€1,090 million), including the portion due within twelve months (€30 million
included under other short-term financial receivables).
Millions of euro Carrying amount Fair value Carrying amount Fair value
at Dec. 31, 2006 at Dec. 31, 2005
Long-term financial receivables 1,120 1,120 66 66
Total 1,120 1,120 66 66
The following table shows the notional amounts and the fair value of derivative
contracts classified under non-current financial assets:
Millions of euro Notional value Fair value

at Dec. 31, 2006 at Dec. 31, 2005 at Dec. 31, 2006 at Dec. 31, 2005 2006-2005

- interest rates 2,586 327 37 11 26
Total 2,586 327 37 11 26
The increase in the fair values of the interest-rate derivatives is primarily due to the
increase in interest rates during 2006, particularly at short and medium term (with 6-
month Euribor going from 2.64% at the end of 2005 to 3.85% at the end of 2006).
19. Other non-current assets – €568 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Receivables from Electricity Equalization Fund 209 847 (638)
Receivables from State Decommissioning Fund 269 - 269
Other long-term receivables:

- tax paid on account on termination benefits 5 19 (14)
- loans to employees 45 44 1
- other receivables 40 65 (25)
Total other long-term receivables 90 128 (38)
TOTAL 568 975 (407)
The decrease of €638 million in “Receivables from the Electricity Equalization Fund” is
mainly due to the reimbursement of stranded costs, pursuant to Resolution no. 132/06
of June 28, 2006, of the Authority for Electricity and Gas.
173
The “Receivables from the State Decommissioning Fund” in the amount of €269 million
are entirely related to the consolidation of Slovenské elektrárne. The receivables
regard the contribution that the company, as a nuclear generation operator, paid to the
Slovakian national nuclear decommissioning fund in the manner and in accordance
with the timetable established under Slovakian law.(1) The resources will be used by the
Slovakian government to reimburse to the generating companies that paid into the
Fund part of the future costs of decommissioning nuclear plants and managing the
related waste, including post-operational costs in the period between the termination of
generation activities and the start of decommissioning. If such costs are greater than
the amounts paid into the Fund up to the decommissioning date, the rules governing
the Fund establish that the difference can be recovered from end users through rate
increases.
(1) The fund and its assets are managed entirely by the Government.
174
Current assets
20. Inventories – €1,209 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Raw materials, consumables and supplies:

- fuel 853 585 268
- materials, equipment and other inventories 207 115 92
Total 1,060 700 360
Buildings available for sale 148 166 (18)

Advances 1 18 (17)
TOTAL 1,209 884 325
Raw materials, consumables and supplies consist of fuel inventories to cover the
company’s requirements for generation and trading activities, as well as materials and
equipment for plant operation, maintenance and construction. The increase is primarily
related to the consolidation of Slovenské elektrárne, as well as to the measurement of
fuel-oil inventories at higher weighted-average prices.
The buildings available for sale are remaining units from the Group’s real estate
portfolio and are primarily civil buildings. The decrease is related to sales made during
the period.
21. Trade receivables – €7,958 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Customers:
- sale and transport of electricity 6,809 6,850 (41)
- distribution and sale of natural gas 712 611 101
- other activities 387 506 (119)
Total 7,908 7,967 (59)
Trade receivables due from associates 7 290 (283)

Receivables for contract work in progress 43 59 (16)
TOTAL 7,958 8,316 (358)
The decline in “Trade receivables due from associates” primarily refers to transactions
with Wind, which, following the equity exchange transaction, were classified, for the
uncollected amount, at December 31, 2006 under trade receivables from third-party
customers.
175
Part of the trade receivables (€4,549 million) regard amounts determined as accrued at
the end of the period and therefore have not yet been invoiced.
Trade receivables from customers are recognized net of the related provision for
doubtful accounts, which totaled €482 million at the end of the year, compared with an
opening balance of €347 million. The table below sets out the changes in the provision,
which reflect the change in the scope of consolidation related primarily to Slovenské
elektrárne (€155 million).
Millions of euro
Balance at Jan 1, 2005 486
Accruals 188
Utilization (29)
Changes in scope of consolidation (305)
Other changes 7
Balance at Dec. 31, 2005 347
Accruals 110
Utilization (129)
Changes in scope of consolidation 156
Other changes (2)
Balance at Dec. 31, 2005 482
22. Tax receivables – €431 million

Tax receivables at December 31, 2006 totaled €431 million and are essentially related
to taxes and tax surcharges in the amount of €132 million and receivables for indirect
taxation in the amount of €91 million. They also include €121 million in respect of
recognition of the right to obtain reimbursement of prior-year items recognized in 2006
from the tax authorities.
23. Current financial assets – €402 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Receivables for factoring advances 211 374 (163)

Derivative contracts 120 115 5
Other securities 25 28 (3)
Equity investments - 43 (43)
Other 46 9 37
Total 402 569 (167)
176
The €163 million decrease in “Receivables for factoring advances” is mainly due to a
reduction in the amounts discounted by suppliers, essentially attributable to the
termination of factoring relationships with Wind suppliers.
The following table reports the notional values and the fair value of derivative contracts,
grouped by hedge type and designation:


- interest rates - 60 - - -
- exchange rates 25 1 - - -
- commodities 1,034 1,372 48 57 (9)
Total 1,059 1,433 48 57 (9)
- interest rates 42 60 - 1 (1)
- exchange rates 208 703 2 9 (7)
- commodities 407 7,179 70 48 22
Total 657 7,942 72 58 14
TOTAL 1,716 9,375 120 115 5
Commodity derivates are related to:

two-way contracts for differences with a notional value of €1,034 million and a fair
value of €48 million. These amounts refer both to the two-way contracts for
differences with the Single Buyer for 2007 and the virtual power plant (VPP)
contracts that Enel entered into with the counterparties selected through the
auction of December 28, 2006. These contracts are also two-way contracts for
differences;
commodity derivatives on fuels, with a notional value of €405 million and a fair
value of €11 million;
trading derivatives on electricity, with a net notional value of about €2 million and a
fair value of €1 million;
embedded derivatives related to an energy sale contract in Slovakia, with a fair
value of €58 million.
At December 31, 2005, derivatives in commodities mainly related to fuel and electricity
had a notional value of €913 million and a fair value of €5 million, while energy trading
operations were recognized as current liabilities because their fair value was negative in
the amount of €1 million (compared with a net notional value of €107 million). The
additional €6,266 million of notional value at December 31, 2005, referred to one-way
contracts for differences, which are currently included among liabilities.
177
At December 31, 2005, the item “Equity investments” consisted entirely of the fair value
of the 1.02% investment in Terna in respect of the bonus shares granted to
shareholders, the rights to which were exercised in January 2006.
24. Cash and cash equivalents – €547 million

Cash and cash equivalents, detailed in the table below, are not restricted by any
encumbrances, apart from €28 million essentially attributable to deposits pledged to
secure transactions carried out by Enel North America and Enel Panama.
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Bank and post office deposits 541 472 69

Cash and cash equivalents on hand 6 4 2
Total 547 476 71
25. Other current assets – €2,453 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Receivables due from Electricity Equalization Fund 1,355 816 539

Receivables due from employees 14 14 -
Receivables due from others 975 801 174
Accrued operating income and prepaid expenses 109 81 28
Total 2,453 1,712 741
“Receivables due from Electricity Equalization Fund” show an increase of €539 million
primarily as a result of the increase in receivables arising from the application of the
equalization mechanisms on electricity purchases.
Including the portion of receivables classified as long-term (€209 million), total
receivables due from the Electricity Equalization Fund at December 31, 2006, amounted
to €1,564 million, partially offset by payables of €948 million.
178
Liabilities and shareholders’ equity
26. Equity attributable to the shareholders of the Parent Company – €18,460 million
During 2006, 19,124,633 options that had been distributed under the stock option plans
for 2002, 2003 and 2004 were exercised. The exercise of these options generated an
increase of €108 million in equity through an increase in share capital of €19 million and
in the share premium reserve of €89 million. In addition, as regards the exercised
options, the share premium reserve increased by a further €7 million as a result of the
reclassification from the specific stock option reserve.
Share capital – €6,176 million

Share capital at December 31, 2006 consisted of 6,176,196,279 ordinary shares with a
par value of €1.00 each (6,157,071,646 shares at December 31, 2005).
Based on the shareholders register and other available information, no shareholders
held more than 2% of the total share capital, apart from the Ministry for the Economy
and Finance, which holds 21.14%, and its subsidiary Cassa Depositi e Prestiti, which
holds 10.16%.
Other reserves – €4,549 million
Share premium reserve – €607 million

The change in the year reflects the exercise of stock options by beneficiaries.
Legal reserve – €1,453 million
Other reserves – €2,245 million

This includes €2,215 million in respect of the remaining portion of the value
adjustments carried out when Enel was transformed from a public entity to a company
limited by shares.
Pursuant to Article 47 of the Uniform Tax Code (Testo Unico Imposte sul Reddito), this
amount does not constitute taxable income when distributed.
Foreign currency translation reserve – €81 million

The increase in this aggregate for the period is attributable to the net appreciation of
the functional currency against the foreign currencies used by subsidiaries.
Reserve from measurement of financial instruments – €163 million

This item includes €16 million in losses not yet realized at the end of the period in
respect of the measurement of cash flow hedging derivatives and recognized directly in
179
equity, as well as €177 million in unrealized gains arising in respect of the fair value
measurement of financial assets.
The table below shows the changes in gains and losses recognized directly in equity
including minority interests and net of the related tax effects.
Gains/(losses)
recognized in Released to
equity for the income
Millions of euro period statement
at Dec. 31, 2005 at Dec. 31, 2006
Reserve for fair value measurement of cash flow

hedging, effective portion (138) 71 52 (15)
Reserve for fair value measurement of financial
investments held for sale 132 77 (32) 177
Reserve for foreign exchange differences 60 66 126
Total gains/(losses) recognized in equity 54 214 20 288
Net deferred tax liabilities calculated on the balance at December 31, 2006 were a
negative €7 million (a positive €53 million at December 31, 2005). The net change of
€60 million during the year included €39 million of net deferred tax liabilities in respect
of gains and losses recognized directly in equity and €21 million of accrued taxes in
respect of reserves released to the income statement.
180
Statement of changes in equity
Share capital and reserves attributable to the shareholders of the Parent Company
Translation of Equity
financial Reserve from attributable to Equity
Share statements in measurement of the shareholders attributable
Share premium Legal Other Retained currencies other financial Net income of the Parent to minority Shareholders’
Millions of euro capital reserve reserve reserves earnings than euro instruments for the period Company interests equity
January 1, 2005 6,104 208 1,453 2,255 7,543 2 (229) 617 17,953 1,113 19,066
-
Exercise of stock options 53 303 - - (17) - - 339 - 339
-
Other changes - - - (10) (6) - - (16) (7) (23)
Change in scope of consolidation - - - - - - - - - (892) (892)
Dividends - - - - (1,597) - - (617) (2,214) (89) (2,303)
2005 interim dividend - - - - - - - (1,169) (1,169) - (1,169)
Net income for period recognized
in equity - - - - - 38 231 - 269 (3) 266
in income statement - - - - - 3,895 3,895 237 4,132
December 31, 2005 6,157 511 1,453 2,245 5,923 40 2 2,726 19,057 359 19,416
Exercise of stock options 19 96 - (7) - - - - 108 - 108

Stock option charges - - - 7 - - - - 7 - 7
Change in scope of consolidation - - - - - - - - - 118 118
Allocation of net income from the
previous year - - - - 2,726 - - (2,726) - - -
Dividends - - - - (2,715) - - - (2,715) (9) (2,724)
(1)
2006 interim dividend - - - - - - - (1,235) (1,235) - (1,235)
in equity - - - - - 41 161 - 202 32 234
in income statement - - - - - - - 3,036 3,036 65 3,101
December 31, 2006 6,176 607 1,453 2,245 5,934 81 163 1,801 18,460 565 19,025
(1) Authorized by the Board of Directors on September 6, 2006 with the ex dividend date set at November 20, 2006 and payment as from November 23, 2006.
181
Non-current liabilities
27. Long-term loans (including the portion falling due within twelve months) – €12,517 million
The aggregate includes long-term payables in respect of bonds, bank loans and other
loans in euro and other currencies, including the portion falling due within twelve
months.
The following table shows long-term debt and repayment schedules at December 31,
2006, grouped by loan and interest rate type.
Portion falling
Nominal due at more than Current
Millions of euro Maturing Balance value Balance 12 months portion Maturing in
31.12.2006 31.12.2006 31.12.2005 2007 2008 2009 2010 2011 Beyond
Bonds:
- listed, fixed rate 2008-2033 5,680 5,721 5,621 5,674 6 1,004 7 107 946 3,610
- listed, floating rate 2009-2012 633 636 799 633 - 50 86 100 - 397
- unlisted, fixed rate 2007-2010 91 91 171 61 30 60 1 - - -
- unlisted, floating rate 2007-2032 2,030 2,030 1,939 2,007 23 22 331 79 56 1,519
Total 8,434 8,478 8,530 8,375 59 1,136 425 286 1,002 5,526
Bank loans:
- fixed rate 2007-2015 130 130 166 91 39 19 20 9 9 34
- floating rate 2007-2026 3,780 3,802 3,015 3,586 194 235 282 254 816 1,999
Total 3,910 3,932 3,181 3,677 233 254 302 263 825 2,033
Non-bank loans:
- fixed rate 2007-2026 132 135 138 104 28 21 7 6 7 63
- floating rate 2009-2020 41 41 53 38 3 3 2 2 2 29
Total 173 176 191 142 31 24 9 8 9 92
TOTAL 12,517 12,586 11,902 12,194 323 1,414 736 557 1,836 7,651
The balance for bonds is stated net of €474 million relating to the unlisted floating-rate
“Special series of bonds reserved for employees 1994-2019”, which the Parent
Company holds in portfolio.
182
The table below reports long-term financial debt by currency and interest rate.
Long-term financial debt by currency and interest rate.

Current Effective
Millions of euro Balance Nominal value Balance interest rate interest rate
at Dec. 31, 2006 at Dec. 31, 2005 at Dec. 31, 2006
Euro 11,869 11,935 11,444 4.36% 4.41%
US dollar 222 225 185 8.09% 8.11%

Pound sterling 62 62 62 5.73% 5.73%
Swiss franc 13 13 22 6.49% 6.49%
Japanese yen 59 59 109 1.65% 1.65%
Other currencies 292 292 80 5.92% 5.92%
Total non-euro currencies 648 651 458
TOTAL 12,517 12,586 11,902
Change in the nominal value of long-term debt

Changes in Exchange
Change in consolidated New rate
Millions of euro Nominal value Repayments own bonds companies financing differences Nominal value
at Dec. 31, 2005 at Dec. 31, 2006
Bonds 8,599 (487) 53 246 97 (30) 8,478

Bank loans 3,195 (1,173) - 493 1,425 (8) 3,932
Non-bank loans 191 (45) - 45 2 (17) 176
Total financial debt 11,985 (1,705) 53 784 1,524 (55) 12,586
Compared with December 31, 2005, the nominal value of long-term debt increased by
a total of €601 million, which is the net effect of €1,705 million in repayments, €1,524
million in new financing, €784 million arising from changes in the scope of
consolidation, €53 million due to changes in own bonds held, and €55 million in
exchange rate gains.
The main repayments for the year concern bonds in the amount of €487 million, €100
million in respect of Enel SpA’s matured 36-month revolving credit lines, the repayment
of about €1,073 million of bank loans held by Slovenské elektrárne, Enel Maritza East 3
(formerly Maritza East III Power Company) and Enel Unión Fenosa Renovables and
other maturing loans, as well as non-bank loans in the amount of €45 million.
The main financing transactions for 2006 include the following:

the refinancing of Slovenské elektrárne debt with a new 5-year revolving line of
credit for a total of €600 million without an Enel SpA guarantee, €565 million of
which was drawn at the end of 2006;
183
the renegotiation of the project financing in respect of Enel Maritza East 3 (formerly
Maritza East III Power Company) in the amount of €450 million payable in 2023 and
fully guaranteed by SACE, €220 million of which was drawn at December 31, 2006;
the renegotiation of the Acuerdo Marco II project financing for Enel Unión Fenosa
Renovables in the amount of €283 million with a maturity of 15 years, €80 million of
which was drawn at December 31, 2006;
the issue by Enel SpA of two additional tranches of a privately-placed bond issue
for leading Italian insurance companies in the amount of €97 million maturing in
2024;
the signing by Enel Viesgo Generación of an EIB loan in the amount of €150 million
for investment in the Escatrón plant, which is yet to be disbursed;
the signing by Enel Distribuzione of an EIB loan in the amount of €600 million for
investments in the “Network Efficiency” project, which was disbursed in its entirety
at December 31, 2006.
In addition, in 2006 two bond issues were consolidated, one for €195 million issued by
Slovenské elektrárne in 2004 maturing in 2011 and another with a residual value of €51
million issued by Fortuna maturing in 2013.
Finally, Enel SpA’s 5-year (renewable for a further two years) revolving line of credit in
the amount of €5 billion agreed in November 2005 was available in its entirety at
December 31, 2006.
184
The following table compares the carrying amount and the fair value of long-term debt,
including the portion falling due within twelve months, broken down by category.
Carrying Carrying
Millions of euro amount Fair value amount Fair value
at Dec. 31, 2006 at Dec. 31, 2005
Bonds:
- fixed-rate 5,771 5,938 5,792 6,235
- floating-rate 2,663 2,699 2,738 2,826
Total 8,434 8,637 8,530 9,061
Bank loans:
- fixed-rate 130 133 166 173
- floating-rate 3,780 3,785 3,015 3,012
Total 3,910 3,918 3,181 3,185
Non-bank loans:
- fixed-rate 132 135 138 138
- floating-rate 41 41 53 53
Total 173 176 191 191
TOTAL 12,517 12,731 11,902 12,437
The following tables show changes in the long-term loans for the period, distinguishing
current from non-current portions.
Long-term loans (excluding the current portion)
Millions of euro Carrying amount Carrying amount

at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Bonds:
- fixed-rate 5,735 5,495 240
- floating-rate 2,640 2,548 92
Total 8,375 8,043 332
Bank loans:
- fixed-rate 91 127 (36)
- floating-rate 3,586 2,655 931
Total 3,677 2,782 895
Non-bank loans:
- fixed-rate 104 96 8
- floating-rate 38 46 (8)
Total 142 142 -
TOTAL 12,194 10,967 1,227
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Current portion of long-term loans
Millions of euro Carrying amount Carrying amount

at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Bonds:
- fixed-rate 36 297 (261)
Total 59 487 (428)
Bank loans:
- fixed-rate 39 39 -
Total 233 399 (166)
Non-bank loans:
- fixed-rate 28 42 (14)
Total 31 49 (18)
TOTAL 323 935 (612)
At December 31, 2006, 57% of net financial debt, equal to €11,690 million (€12,312
million at December 31, 2005), paid floating interest rates. Taking account of cash flow
hedges using interest rate derivatives considered effective under the provisions of the
IFRS-EU, exposure to interest rate risk at December 31, 2006 was 23%. If account is
also taken of interest rate derivatives used as hedges but which do not qualify for
hedge accounting, the residual exposure of financial debt to interest rate risk falls even
lower, to 20%.
The Group’s main long-term financial debts are governed by covenants containing
undertakings by the borrowers (Enel SpA and the other Group companies) and in some
cases Enel SpA as guarantor that are commonly adopted in international business
practice. The main covenants governing Enel’s debt regard the bond issues carried out
within the framework of the Global Medium Term Notes program and loans granted by
the European Investment Bank. To date none of the covenants have been triggered.
The commitments in respect of the bond issues in the Global Medium Term Notes
program can be summarized as follows:
negative pledge clauses under which the issuer may not establish or maintain
(except under statutory requirement) mortgages, liens or other encumbrances on all
or part of its assets to secure any listed bond or bond for which listing is planned
unless the same guarantee is extended equally or pro rata to the bonds in question;
186
pari passu clauses, under which the securities constitute a direct, unconditional and
unsecured obligation of the issuer and are issued without preferential rights among
them and have the same seniority as other present and future bonds of the issuer;
specification of default events, whose occurrence (for example, insolvency, failure
to pay principle or interest, initiation of liquidation proceedings, etc.) constitutes a
default; under “cross default” clauses, the occurrence of a default event in respect
of any financial liability (above a threshold level) issued by the issuer or significant
subsidiaries (defined as consolidated companies whose gross revenues or total
assets are at least 10% of gross consolidated revenues or total consolidated
assets) constitutes a default in respect of the liability in question, which becomes
immediately repayable;
early redemption clauses in the event of new tax requirements, which permit early
redemption at par of all outstanding bonds.
The main covenants governing the loans granted by the European Investment Bank
can be summarized as follows:
negative pledge clauses, under which the issuer undertakes not to establish or
grant to third parties additional guarantees or privileges with respect to those
already established in the individual contracts by the Company or Enel Group
companies, unless an equivalent guarantee is extended equally or pro rata to the
loans in question;
clauses that require the guarantor (whether Enel SpA or banks acceptable to the
EIB) to maintain its rating above a specified grade;
in the case of guarantees provided by Enel SpA, the Group’s equity may not fall
below a specified level;
material changes clauses, under which the occurrence of a specified event
(mergers, spin-offs, disposal or transfer of business units, changes in company
control structure, etc.) gives rise to the consequent adjustment of the contract,
without which the loan shall become repayable immediately without payment of any
commission;
requirements to report periodically to the EIB;
requirement for insurance coverage and maintenance of property, possession and
use of the works, plant and machinery financed by the loan over the entire term of
the agreement;
contract termination clauses, under which the occurrence of a specified event
(serious inaccuracies in documentation presented in support of the contract, failure
to repay at maturity, suspension of payments, insolvency, special administration,
disposal of assets to creditors, dissolution, liquidation, total or partial disposal of
187
assets, declaration of bankruptcy or composition with creditors or receivership,
substantial decrease in equity, etc.) triggers immediate repayment.
Pursuant to the Consob instructions of July 28, 2006, the following table reports the net
financial position at December 31, 2006 and 2005.
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Cash on hand 6 4 2
Bank and post office deposits 541 472 69
Securities 25 32 (7)
Total cash and cash equivalents 572 508 64
Financial receivables due from associates 10 3 7

Factoring receivables 211 374 (163)
Short-term portion of long-term financial receivables 30 3 27
Total securities and short-term financial receivables 251 380 (129)
Short-term bank debt (542) (970) 428

Commercial paper (531) (275) (256)
Short-term portion of long-term bank debt (233) (399) 166
Bonds (short-term portion) (59) (487) 428
Other loans (short-term portion) (31) (49) 18
Other short-term financial payables (13) (116) 103
Total short-term financial debt (1,409) (2,296) 887
Net short-term financial position (586) (1,408) 822
Long-term financial receivables 1,090 63 1,027
Debt to banks and financing entities (3,677) (2,782) (895)

Bonds (8,375) (8,043) (332)
Other loans (142) (142) 0
Total long-term financial debt (12,194) (10,967) (1,227)
Net long-term financial position (11,104) (10,904) (200)
TOTAL NET FINANCIAL POSITION (11,690) (12,312) 622
28. Post-employment and other employee benefits – €2,633 million

The Group provides its employees with a variety of benefits, including termination
benefits, additional months’ pay for having reached age limits or eligibility for old-age
pension, loyalty bonuses for achievement of seniority milestones, supplementary
pension and healthcare plans, domestic electricity discounts and similar benefits.
The item “Post-employment and other employee benefits” regards accruals made to
cover benefits due at the time the employment relationship is terminated and other
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long-term benefits to which employees have a statutory or contractual right as well as
post-employment benefits.
The following table reports the change during the year in actuarial liabilities and the fair
value of plan assets, as well as a reconciliation of net actuarial liabilities with liabilities
recognized in the balance sheet at December 31, 2006 and December 31, 2005.
Benefits due on termination of

employment and other long- Post-employment benefits under
Millions of euro term benefits defined-benefit plans
2006 2005 2006 2005
Changes in actuarial liabilities:

Actuarial liabilities at the beginning of the year 1,783 1,977 1,199 1,237
(1) (1)
Service cost 83 95 9 9
(1) (1)
Interest cost 74 68 48 49
Benefits paid (162) (232) (58) (54)
Other changes (64) - (6) -
Changes in scope of consolidation 37 (113) 6 (61)
Actuarial (gains)/losses (31) (12) 3 19
Foreign exchange (gains)/losses 3 - 1 -
Actuarial liability at the end of the year 1,723 1,783 1,202 1,199
Changes in plan assets:

Fair value at the beginning of the year 281 172 23 23
Expected return on plan assets 14 12 - 1
Actuarial gains/(losses) (2) (9) - -
Contributions paid by company 26 15 1 -
Other changes - 109 - -
Benefits paid (24) (18) (1) (1)
Fair value at the end of the year 295 281 23 23
Reconciliation with carrying amount:

Net actuarial liabilities at the end of the year 1,428 1,502 1,179 1,176
Unrecognized (gains)/losses (29) (3) 3 (19)
Carrying amount of liabilities at the end
of the year 1,457 1,505 1,176 1,157
(1) Includes Telecommunications and Transmission Networks Divisions until date of deconsolidation.
The liabilities recognized are reported net of plan assets, whose fair value at period-
end amounted to €318 million, including net unrecognized actuarial gains of €26
million. The expected return used in estimating the fair value of the plan assets is equal
to 4.5% (4.2% in 2005).
The cost of employee benefits in 2006 came to €186 million (€257 million in 2005), of
which €108 million in respect of accretion cost recognized under interest cost (€117
million in 2005) and €78 million recognized under personnel costs. The cost for
189
termination benefit in 2006 amounted to €101 million, of which €37 million in respect of
accretion cost.
The main actuarial assumptions used to calculate the liabilities in respect of employee
benefits are set out in the following table:
2006 2005
Discount rate 4.25% 4.00%

Rate of increase in wages 3.00% 3.00%
Rate of increase in healthcare costs 3.00% 3.00%
29. Provisions for risks and charges – €4,151 million
Taken to Changes in Utilization

income scope of and other
Millions of euro Accruals statement consolidation changes
at Dec. 31, 2005 at Dec. 31, 2006
Provision for litigation, risks and other charges:

- nuclear decommissioning - 123 - 1,893 173 2,189
- non-nuclear plant retirement and site restoration 27 16 - 169 11 223
- litigation 341 62 (22) 7 (40) 348
- CO2 emissions charges 228 9 (108) - (120) 9
- other 550 215 (61) 436 (180) 960
Total 1,146 425 (191) 2,505 (156) 3,729
Provision for early-retirement incentives 121 400 - 21 (120) 422
TOTAL 1,267 825 (191) 2,526 (276) 4,151
Nuclear decommissioning provision

The “nuclear decommissioning” provision regards the V1 and V2 plants at Jasklovske
Bohunice and EMO 1 and 2 plants at Mochovce. It comprises:
provision for disposal and storage of radioactive waste: at December 31, 2006 this
amounted to €288 million in respect of the cost for the transport, treatment and
storage of nuclear waste. The liability was estimated on the basis of the Company’s
obligations under the applicable Slovakian legislation;
provision for storage and long-term disposal of spent nuclear fuel: at December 31,
2006 this amounted to €1,222 million in respect of the estimated cost for the
transport and storage of spent nuclear fuel. The liability was estimated on the basis
of engineering and financial assessments of the costs of building the storage
facilities;
provision for decommissioning of nuclear power plants: at December 31, 2006 this
amounted to €679 million in respect of the estimated cost of retiring the plants. The
liability was estimated on the basis of engineering and financial assessments of the
190
cost of retirement (also using comparative analyses) and the operating plans for
decommissioning established by the relevant Slovakian authorities.
The estimated timing of the outlays described above takes account of current
knowledge of environmental regulations, the amount of time used to estimate the costs
and the difficulties presented by the extremely long time span over which such costs
could arise.
The charges covered by the provisions are reported at their present value using
discount rates of between 4.2% and 4.5%.
Provision for non-nuclear plant retirement and site restoration

The “provision for non-nuclear retirement and site restoration” represents the present
value of the estimated cost for the retirement and removal of non-nuclear plant where
there is a legal or constructive obligation to do so. The increase in 2006 of €196 million
is related to Slovenské elektrárne in the amount of €190 million (of which €169 million
at the acquisition date) regarding the thermal plants at Novany and Vojany.
Litigation provision
The “litigation” provision covers contingent liabilities that could arise in respect of
pending litigation and other disputes. It includes an estimate of the potential liability
relating to disputes that arose during the period, as well as revised estimates of the
potential costs associated with disputes initiated in prior periods. The estimates are
based on the opinions of internal and external legal counsel.
Other provisions
“Other” provisions refer to various risks and charges, mainly in connection with regulatory
disputes and disputes with local authorities regarding various duties and fees.
Provision for early-retirement incentives

The “Provision for early-retirement incentives” includes the estimated charges relating
to binding agreements for the voluntary termination of employment contracts in
response to restructuring needs.
191
30. Deferred tax liabilities – €2,504 million
The table reports changes in “Deferred tax liabilities” by type of temporary difference,
determined on the basis of the current tax rates.
Increase
/(decrease)
taken to income Other
Millions of euro statement changes
at Dec. 31, 2005 at Dec. 31, 2006
Nature of the temporary differences:

- differences on non-current and financial assets 1,900 127 (14) 2,013
- income subject to deferred taxation 57 (43) 6 20
- allocation of goodwill to assets 97 (4) 7 100
- measurement of financial instruments 96 (41) (5) 50
- other items 314 8 (1) 321
Total 2,464 47 (7) 2,504
The caption, which showed a total of €2,504 million at December 31, 2006, includes
the deferred tax liabilities on differences between depreciation charged for tax
purposes, including accelerated depreciation, and depreciation based on the estimated
useful lives of assets.
31. Non-current financial liabilities – €116 million

These consist of the fair value measurement of cash flow hedge derivatives. The
following table shows the related notional amount and fair value.


- interest rates 2,238 3,749 116 262 (146)
Total 2,238 3,749 116 262 (146)
Derivatives outstanding at December 31, 2006 were essentially composed of interest

rate hedges on a number of long-term floating-rate loans. The negative fair value of
such positions, primarily the result of a significant reduction in market interest rates in
recent years, is largely offset by the reduction in financial expense relating to the
hedged liabilities.
The decrease for the period in both the notional value and fair value of the derivatives
was essentially caused by the rise in market interest rates during 2006.
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32. Other non-current liabilities – €1,044 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Deferred operating liabilities 1,014 828 186

Other items 30 18 12
Total 1,044 846 198
The change in “Deferred operating liabilities” essentially reflects the increase in

deferred connection revenues, as well as the contributions that the Electricity
Equalization Fund is to grant Enel for the cancellation of white certificates related to
energy efficiency projects realized or acquired.
Current liabilities
33. Short-term loans – €1,086 million

At December 31, 2006, short-term loans totaled €1,086 million, a decrease of €275
million from December 31, 2005, as detailed below.
Book Book
Book value Fair value value Fair value value Fair value
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Short-term amounts due to banks 542 542 970 970 (428) (428)
Commercial paper 531 531 275 275 256 256
Other short-term financial payables 13 13 116 116 (103) (103)
Short-term financial debt 1,086 1,086 1,361 1,361 (275) (275)
The payables represented by “Commercial paper” related to issues outstanding at

year-end in the context of the €4,000 million program launched in November 2005 by
Enel Finance International and guaranteed by Enel SpA.
At December 31, 2006, issues under the program totaled €531 million. The nominal
value of the commercial paper is €535 million and is in the following currencies: euro
(€202 million), pounds sterling (the equivalent of €48 million), US dollars (the
equivalent of €251 million), and Swiss francs (the equivalent of €34 million). The
exchange rate risk in respect of currencies other than the euro are fully hedged by
currency swaps.
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34. Trade payables – €6,188 million
This item totaled €6,188 million, a decline of €422 million compared with December 31,
2005, and includes payables for the supply of electricity, fuel, materials and equipment
for tenders and sundry services.
35. Current financial liabilities – €941 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Deferred financial liabilities 177 176 1

Derivative contracts 753 103 650
Other items 11 15 (4)
Total 941 294 647
The following table shows the notional value and fair value of the derivative contracts:


- interest rates 2 191 - 10 (10)
- exchange rates 1 20 - - -
Total 3 211 - 10 (10)
- interest rates 309 610 26 55 (29)
- exchange rates 1,340 1,147 24 15 9
- commodities 4,730 125 698 13 685
- other - - 5 10 (5)
Total 6,379 1,882 753 93 660
TOTAL 6,382 2,093 753 103 650
Trading derivatives on interest and exchange rates essentially include transactions

entered into for hedging purposes, but which do not qualify for hedge accounting under
the IFRS.
Trading derivatives on commodities concern:
fuel trading, with a notional value of €444 million and a fair value of €28 million;
one-way contracts for differences, with a notional value of €3,219 million and a fair
value of €123 million;
trading derivatives on electricity, with a net notional value of about €55 million and a
fair value of €7 million;
embedded derivatives related to energy sale and purchase contracts in Slovakia,
with a notional value of €1,012 million and a fair value of €540 million.
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36. Other current liabilities - €4,106 million
Millions of euro
at Dec. 31, 2006 at Dec. 31, 2005 2006-2005
Payables due to customers 1,572 1,755 (183)

Payables due to the Electricity Equalization Fund 948 406 542
Payables due to employees 341 353 (12)
Taxes payable 221 199 22
Social security contributions payable 147 144 3
Other 877 533 344
Total 4,106 3,390 716
The item “Payables due to customers” include amounts for security deposits totaling
€848 million, which refers to amounts received from customers under the terms of
contracts for the delivery of electricity. Upon the finalization of contracts, the deposits
(the use of which is not restricted) are recognized as current liabilities because the
Company does not have an unconditional right to defer the repayment of the liabilities
beyond twelve months.
“Payables due to the Electricity Equalization Fund” essentially increased due to the
€526 million rise in the payable related to certain rate components concerning general
system charges and cost equalization.
37. Related parties

As the main operator in the field of generation, transport and distribution of electricity in
Italy, Enel provides services to a number of State-controlled companies. In the current
regulatory framework, Enel concludes transactions with Terna - Rete Elettrica
Nazionale, the Single Buyer, the Electricity Services Operator and the Market Operator
(each of which is entirely controlled either directly or indirectly by the Ministry for the
Economy and Finance).
Fees for the transport of electricity payable to Terna and certain charges paid to the
Market Operator are determined by the Authority for Electricity and Gas.
Transactions relating to purchases and sales of electricity concluded with the Market
Operator on the Power Exchange and with the Single Buyer are settled at market
prices.
Companies in the Domestic Sales Division acquire electricity from the Single Buyer and
settle the contracts for difference related to CIP6 energy with the Electricity Services
Operator, in addition to paying Terna fees for the use of the National Transmission
Network (NTN). Companies that are part of the Domestic Generation and Energy
Management Division, in addition to paying fees for the use of the NTN to Terna, acquire
from and sell electricity to the Market Operator on the Power Exchange.
195
Enel also acquires fuel for generation and gas distribution and sale from ENI, a
company controlled by the Ministry for the Economy and Finance.
All transactions with related parties are concluded on normal market terms and
conditions.
The following table summarizes the relationships:
Balance sheet Income statement

Millions of euro Receivables Payables Costs Revenues
at Dec. 31, 2006 2006
Single Buyer 483 2,017 12,309 1,749

Market Operator 968 352 1,579 6,274
Terna 357 394 1,919 2,062
Electricity Services Operator 263 354 27 539
ENI 39 191 1,502 199
Italian Post Office - 41 145 15
Total 2,110 3,349 17,481 10,838
The following table shows transactions with associated companies outstanding at

December 31, 2006 and carried out during the year.
Balance sheet Income statement

Millions of euro Receivables Payables Costs Revenues
at Dec. 31, 2006 2006
Cesi 1 17 15 1
Other companies 16 1 3 7
Total 17 18 18 8
In compliance with the Enel Group’s rules of corporate governance, which are
discussed in detail in the special section attached to these financial statements,
transactions with related parties are carried out in accordance with criteria of
procedural and substantive propriety.
With a view to assuring substantive propriety – in order to ensure fairness in
transactions with related parties, and to account for the special nature, value or other
characteristics of a given transaction – the Board of Directors may ask independent
experts to value the assets involved in the transaction and provide financial, legal or
technical advice.
196
38. Contractual commitments and guarantees
The commitments entered into by the Enel Group and the guarantees given to third
parties are shown below:
Millions of euro
at Dec. 31, 2006
Guarantees given:
- sureties and other guarantees granted to third parties 1,356
Commitments to suppliers for:

- electricity purchases 4,592
- fuel purchases 33,024
- various supplies 6,177
- tenders 1,827
- other 258
Total 45,878
TOTAL 47,234
Guarantees granted to third parties amounted to €1,356 million and include €737
million in commitments relating to the sale of real estate assets in connection with the
regulations that, for a period of six years and six months from July 2004, govern the
termination of leases and the related payments. The value of such guarantees is
reduced annually by a specified amount.
The expected cash flow of the lease contracts, including forecast inflation, is as follows:
2007: €74 million;
2008: €73 million;
2009: €74 million;
2010: €68 million;
2011: €55 million.
Commitments for electricity mainly regard imports from France, Switzerland and
Germany, and are all related to the period 2007-2011.
Commitments for the purchase of fuels are determined with reference to the
parameters and exchange rates applicable at the end of the period (given that fuel
prices vary and are mainly set in foreign currencies). The total at December 31, 2006,
was €33,024 million, of which €13,930 million refers to the period 2007-2011, €11,982
to the period 2012-2016, €6,912 million to the period 2017-2021, and the remaining
€200 million beyond 2021.
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39. Contingent liabilities and assets
Litigation on rates
Enel is the target of a series of suits filed by a number of companies that consume
large amounts of electricity and who have challenged, in full or in part, the legitimacy of
the measures with which first the Interministerial Price Committee (CIP) and then the
Authority for Electricity and Gas determined changes in electricity rates in the past. To
date, the courts have generally rejected the complaints lodged and an examination of
the rulings would indicate that the chance of unfavorable judgments is remote.
Environmental litigation
Litigation regarding environmental issues primarily concerns the installation and
operation of power lines and equipment of Enel Distribuzione, which succeeded Enel
SpA in the related relationships.
Enel Distribuzione has been involved in a number of civil and administrative suits
relating to requests, often using urgent procedures, for the precautionary transfer or
modification of operations on power lines by persons living near them on the basis of
their alleged potential to cause harm, despite the fact that they have been installed in
compliance with current regulations. In a number of proceedings claims for damages
for harm caused by electromagnetic fields have been lodged. The outcome of litigation
on these issues is normally favorable to Enel Distribuzione, with only sporadic adverse
precautionary rulings. All of these have been appealed, so that at the present date
there are no final adverse rulings, and no damages for physical harm have ever been
granted.
There have also been a number of proceedings concerning electromagnetic fields
generated by medium- and low-voltage transformer substations within buildings, in
which the equipment has always been in compliance with induction limits set by current
regulations.
The situation concerning litigation has evolved thanks to the clarification of the
legislative framework following the entry into force of the framework law on
electromagnetic emissions (Law 36 of February 22, 2001) and the related
implementing regulations (Prime Minister’s Order of July 8, 2003). The new regulations
seek to harmonize regulation of the field at the national level. The new rules also
introduce a ten-year program as from the entry into force of Law 36/2001 for the
environmental upgrading of the entire national network to comply with new exposure
limits. They also envisage the possibility of recovering, in part or in full, costs incurred
by the owners of power lines and substations through electricity rates, in accordance
with criteria to be set by the Authority for Electricity and Gas, pursuant to Law 481/95,
as they represent costs incurred in the public interest. At present, the Prime Minister
198
has not issued the Order setting the criteria for the upgrading of power lines (Article
4(4) of Law 36/2001), nor have the criteria for measuring of the parameters and
calculating tolerance limits been established, as provided for in the Order of July 8,
2003.
A number of urban planning and environmental disputes regarding the construction and
operation of certain power plants and transmission and distribution lines are pending.
Based on an analysis of individual cases, Enel believes the possibility of adverse
rulings is remote. For a limited number of cases, an unfavorable outcome cannot be
ruled out completely, however. The consequences of unfavorable judgments could, in
addition to the possible payment of damages, also include the costs related to work
required to modify electrical equipment and the temporary unavailability of the plant. At
present such charges cannot be reliably quantified and are therefore not included in the
“Provision for litigation, risks and other charges”.
Porto Tolle thermal plant

Air pollution – Criminal proceedings against Enel directors and employees
– Damages for environmental harm
The Court of Adria, in a ruling issued March 31, 2006 concluding criminal proceedings
begun in 2005, convicted former directors and employees of Enel for a number of
incidents of air pollution caused by emissions from the Porto Tolle thermoelectric plant.
The decision, provisionally enforceable, held the defendants and Enel (as a civilly liable
party) jointly liable for the payment of damages for harm to multiple parties, both
natural persons and local authorities. Damages for a number of mainly private parties
were set at the amount of €367,000. The calculation of the amount of damages owed
to certain public entities (the Regions of Veneto and Emilia Romagna, the Province of
Rovigo and various municipalities) has been postponed to a later civil trial, although a
“provisional award” of about €2.5 million was immediately due.
An appeal has been lodged against the ruling of the Court of Adria by the Company
and its employees and former directors. If the ruling in the criminal case is affirmed,
any civil lawsuits brought by interested parties seeking total compensation for losses
suffered could expose the Company to the risk of further expenditures that cannot
currently be quantified.
Out-of-court disputes and litigation connected with the blackout

of September 28, 2003
With regard to the blackout that occurred on September 28, 2003, Enel Distribuzione
received numerous letters (most drafted on the basis of standardized forms prepared
by consumer associations) containing requests for automatic/lump-sum indemnities
under the Electricity Service Charter and resolutions of the Authority for Electricity and
199
Gas (€25.82 each), in addition to further damages to be quantified by customers with a
view to possible legal action.
With regard to litigation, at December 31, 2006 more than 90,000 proceedings were
pending against Enel Distribuzione, individually for small amounts (almost all before
justices of the peace in Southern Italy). All involved requests for automatic/lump-sum
indemnities on the basis of the resolutions of the Authority for Electricity and Gas and
the Electricity Service Charter or damages for loss due to the interruption of electricity
supplies. Enel Distribuzione has challenged these requests with the following
arguments: first, neither the Authority resolutions nor the Electricity Service Charter
(whose reference legislation has been repealed) provide for automatic/lump-sum
indemnities in the case of an interruption of supply, as specified by the Authority in a
press release. Second, in relation to both the manner and extent of the black-out, the
electricity supply interruption of September 28, 2003 was an unexpected and
unforeseeable event and, as such, is ascribable to exceptional events beyond the
control of the Group companies, for which they cannot therefore be held liable in any
way. At December 31, 2006 more than 39,000 rulings had been issued by justices of
the peace, with a majority finding in favor of the plaintiffs. Charges in respect of such
indemnities could be recovered at least in part under existing insurance policies. The
appellate courts have nearly all found in favor of Enel Distribuzione, based upon both
the lack of proof of the loss claimed and the recognition that the company was not
involved in causing the event. The few adverse rulings against Enel Distribuzione (all in
Calabria) have been appealed to the Court of Cassation (the supreme court of appeal).
Extension of municipal property tax (ICI)

Article 1 quinquies of Decree Law 44 of March 31, 2005 (ratified with Law 88/2005)
stated that Article 4 of Law 652 of April 13, 1939 (governing the land registry) shall be
interpreted with regard to power plants alone in the sense that the buildings and
permanent constructions consist of the land and those parts that are structurally
attached to it, even temporarily, which may be joined by any means of connection with
movable parts for the purpose of creating a single complex asset.
As a result of this provision (the interpretation of which was affirmed by a recent
decision of the Court of Cassation) the calculation of the imputed rental income of
buildings that form part of a generation plant must also take removable parts into
account. Consequently, the Enel Group could be required to pay higher local ICI in the
future.
The Court’s decision, however, established nothing with regard to the criteria to be
used in calculating the value to be attributed to these components of imputed rent but
rather referred the question to the Regional Tax Commission with territorial jurisdiction.
The Regional Tax Commission of Emilia Romagna, in Ordinance no. 16/13/06 (filed on
200
July 13, 2006), sent the case to the Constitutional Court on the issue of the
constitutionality of Article 1 quinquies of the Decree Law, finding it relevant and not
clearly unfounded.
Therefore, with regard to pending litigation, the Enel Group shall continue to pursue its
case to request a substantial reduction of the values originally assigned by the Land
Registry Offices to the removable parts of the plant. Enel has, however, allocated an
adequate amount to the “Provisions for risks and charges” to cover fully the potential
charges that would result from an unfavorable outcome. At the same time, Enel does
not feel that further provisions are necessary to take into account possible retroactive
application of the rule on imputed rent proposals, which to date have not been the
subject of comments by the Land Registry Offices and, in any event, primarily concern
small plants.
INPS circular no. 63 of May 6, 2005

concerning contribution obligations in respect of the Cassa Integrazione Guadagni (CIG),
Cassa Integrazione Guadagni Straordinaria (CIGS), Disoccupazione Involontaria (DS)
and Mobilità (unemployment benefit schemes)
On May 6, 2005, the Italian National Social Security Institute (INPS) issued a circular
regarding obligatory contributions to the Cassa Integrazione Guadagni (CIG), Cassa
Integrazione Guadagni Straordinaria (CIGS), Disoccupazione Involontaria (DS) and
Mobilità (all unemployment benefit programs). In regulating the matter, the circular
specified that contributions to be paid in respect of the above programs are also
applicable to State-controlled companies and national public entities involved in
industrial activities that are not wholly public-owned. These include Enel and
companies incorporated by Enel pursuant to Legislative Decree 79 of March 16, 1999,
both for the period following the issue of the circular and retroactively as from the date
on which they ceased to be entirely owned by public entities (in the case of Enel, as
from the date of the IPO, in November 1999).
More specifically, under the provisions of the circular Enel SpA would be required only
to make contributions to CIG and CIGS, while companies incorporated by Enel under
Legislative Decree 79/1999 would also be required to contribute to the DS and Mobilità
programs.
The Enel Group believes that it is not liable for these contributions as it does not meet
the conditions for applicability. In particular, as regards past periods, the Group contests
the payment of contributions for programs whose benefits it would not have been eligible
to use.
The circular has been challenged for precautionary reasons before the administrative
courts, requesting its suspension. The Regional Administrative Court rejected the appeal
for suspension, stating that the matter fell under the exclusive jurisdiction of the ordinary
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courts. Enel therefore filed an appeal with the Labor Court, asking it to find that no
contribution obligation existed for CIG, CIGS and Mobilità. The matter is still pending.
Owing to the complexity of the issues and the need for further study, INPS initially
extended the deadline for the payment of accrued contributions. INPS subsequently felt
it advisable to request an opinion from the Council of State and extended the deadline for
settlement of the obligation until the opinion was issued.
In an opinion issued at the hearing of February 8, 2006, the second section of the
Council of State ruled, specifically, that the circular may not have retroactive effect and
that there are no grounds for levying penalties, therefore ordering that the circular be
amended appropriately.
As regards the contribution for the Disoccupazione Involontaria program (involuntary
unemployment), and therefore the Mobilità program (which applies only where the DS
contribution is also due), the Ministry of Labor, upon completion of the inspection
begun in December 2005 to ascertain whether the conditions exempting Enel and the
companies incorporated by it under Legislative Decree 79/1999 from the contributions
continued to hold, issued a Decree on August 1, 2006 in which it confirmed that both
Enel SpA and the companies incorporated under it that are still members of the Enel
Group have been exempt from the DS (and therefore Mobilità) schemes since they
began operations. The confirmation of the contribution exemption also affects the
Mobilità contribution, whose basis of calculation is the overall payroll subject to the
contribution for Disoccupazione Involontaria.
However, despite the generally favorable situation for Enel and in conflict with the
opinion issued by the Council of State (whose arguments were cited by the Rome
Labor Court in its ruling no. 2384 of February 8, 2007 in Acea vs. INPS) and the
findings of the decree issued by the Ministry of Labor, during 2006 and early 2007 Enel
has received a number of tax assessments demanding payment of contributions for
previous years for the CIG, CIGS, Mobilità and DS programs. The assessments were
suspended at the initiative of INPS or with an injunction of the Labor Court, to which
Enel has appealed the assessments received. Accordingly, as the situation stands it is
felt that the likelihood of incurring a liability in this regard is remote.
Inquiries by the Milan Public Prosecutor’s Office and the State Audit Court
In February 2003, the Milan Public Prosecutor’s Office initiated a criminal investigation
(still ongoing) of former top managers of Enelpower and other individuals for alleged
offences to the detriment of Enelpower and payments made by contractors to receive
certain contracts. Implementing the resolutions of the boards of Enel, Enelpower and
Enel Produzione, legal action was taken against the suppliers involved, which led to
settlements with Siemens and Alstom.
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On the basis of the information that emerged during the criminal proceedings, the State
Audit Court sued the former Chief Executive Officer and a former executive of
Enelpower, in addition to the former Chairman of Enel Produzione, citing them for
possible administrative liability in relation to losses caused to the tax authorities. Enel,
Enelpower and Enel Produzione deposited an instrument in support of the request of
the Regional Public Prosecutor. In a ruling of February 22, 2006, the State Audit Court,
finding that the former directors and managers cited in the suit were liable, awarded
Enelpower damages of about €14 million. The ruling was appealed before the Central
Jurisdictional Appeals Section of the Rome State Audit Court, where it is still pending.
In parallel with the above ruling, Enelpower and Enel Produzione initiated a revocatory
action against the claimants in respect of the former Enel Produzione CEO and the
former Enelpower CEO and manager, obtaining a court ruling of the invalidity in their
regard of a number of asset disposals.
Torrevaldaliga Nord power plant

Transformation to coal - Work on maritime infrastructure – Ordinances of the Region
of Lazio of February 10, 2006 and March 31, 2006 – Suspension of works and denial
of authorization to conduct dredging operations
With the measure of February 10, 2006 and the subsequent measures of March 28 and
31, 2006 the Region of Lazio ordered the suspension of work on the construction of the
maritime infrastructure for the reconversion of the Torrevaldaliga Nord plant to coal,
based on an alleged threat to the environment, and subsequently denied authorization
for the planned dredging of the sea floor. The suspension order led to the stoppage of
work on the infrastructure.
Enel appealed the measures to the Lazio Regional Administrative Court asking it to
suspend their validity. In an order issued at a hearing on April 20, 2006, the Lazio
Regional Administrative Court found that the Region had no authority in this field and
granted the petition for a preliminary injunction thereby allowing Enel to resume work.
Subsequently, on June 16, 2006, the Lazio Regional Administrative Court (in decision
no. 4731) decided the case on the merits, fully granting Enel’s first appeal of the
suspension of works and partially granting Enel’s second appeal related to the
dredging operations, and consequently voiding that portion of the Region’s refusal of
authorization concerning the dredging operations provided for in the Environmental
Impact Assessment Decree of 2003 regarding the conversion project.
The Lazio Regional Administrative Court therefore upheld the legality of past and
current dredging operations performed by Enel, since they have already undergone
specific EIAs and are governed by the Decree authorizing the reconversion of the
plant. Given the absence of any appeal of the ruling within the time limits established
by law, the judgment has become final.
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40. Subsequent events
Agreements for the construction of wind plants in the United States and Canada
On January 5, 2007 Enel, acting through its subsidiary Enel North America, signed a
series of agreements for the construction of two wind plants in the United States and
Canada and for the supply of the electricity generated by the plants, which will have a
maximum capacity of 250 MW and 27 MW respectively.
The Smoky Hills project, in Kansas (USA), will be built in two stages, with the first stage
of 100.8 MW scheduled to come on line by the end of 2007. Once fully implemented,
the facility will have maximum capacity of 250 MW.
NeWind, a wholly-owned subsidiary of Enel North America operating in Canada, signed
a contract for the supply of electricity to Newfoundland and Labrador Hydro through the
construction and operation of the 27 MW St. Lawrence wind project, which will generate
about 100,000 MWh a year. It is scheduled to begin operations by the end of 2008.
Increase in stake in Fortuna

On February 2, 2007 Enel, acting through its Dutch subsidiary, Enel Investment
Holding, acquired the entire share capital of the Panamanian-registered company
Globeleq Holdings Fortuna from Globeleq, which operates in the electricity sector in
emerging markets. Thanks to this transaction, Enel, which is responsible for the
operational management of the “Fortuna” hydroelectric plant, has increased its indirect
holding in the Panamanian hydroelectric generation company from 24.5% to 49%,
enabling it to exercise full operational control of Fortuna. Enel Investment Holding paid
$161.3 million for the stake, equal to about €124.5 million at current exchange rates.
Acquisition of Endesa shares

On February 27, 2007 Enel, acting through its subsidiary Enel Energy Europe (EEE),
purchased 105,800,000 shares of Endesa SA (Endesa), Spain’s leading electricity
generator, equal to 9.99% of that company’s share capital, at a price of €39 per share
for a total of €4,126.2 million. The Endesa shares, acquired through an off-market
transaction with institutional investors, were financed with cash flow and existing lines
of credit, without any involvement of other Endesa shareholders.
On March 1, 2007, EEE entered into a share swap agreement with UBS Limited in
which the underlying is represented by a maximum of 74,112,648 shares of Endesa
(7% of the share capital).
The agreement envisages cash settlement, with an option for EEE to request physical
settlement in Endesa shares subject, among other requirements, to obtaining the
necessary administrative authorizations to carry out the acquisition. To perform the
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share swap, EEE has already obtained financing for the same total of 74,112,648
Endesa shares at an average price of €39 per share.
On the same date, Enel, in addition to requesting from the relevant bodies of the
Spanish Ministry for Industry, Tourism and Trade authorization to exercise the rights in
respect of the entire shareholding owned in Endesa, also asked the Comisión Nacional
de la Energia (the Spanish National Energy Commission - CNE):
to authorize the acquisition of Endesa shares amounting to more than 10% of that
company’s share capital up to the threshold (currently set at 24.99% of the share
capital) beyond which it is obligatory to launch a public tender offer;
to remove any restrictions on Enel’s exercise of its rights as a shareholder of
Endesa with regard to the qualification of the latter as a “principal operator”.
Subsequently, in three transactions carried out on March 1, 2 and 12, EEE entered into
share swap agreements with Mediobanca in which the underlying is represented by a
maximum of 84,488,949 shares of Endesa (7.99% of the share capital).
Settlement procedures are the same as those for the other derivative contract with
UBS.
To date, Enel owns 9.99% of Endesa through EEE and has entered into derivative
contracts in which the underlying is represented by an additional 14.99% of Endesa.
Memorandum of Understanding with RosAtom

On March 14, 2007, Enel and the Federal Atomic Energy Agency of the Russian
Federation (RosAtom) signed a Memorandum of Understanding for the development of
the electricity system and nuclear generation in Russia and Central and Eastern
Europe.
With the agreement, RosAtom and Enel have expressed their intention to develop a
cooperative relationship involving joint investment projects and stakes in the assets
related to:
the construction of new nuclear power plants;
the operation and upgrading of electricity transport networks;
the operation of existing nuclear power plants.
Acquisition of AMP Resources

On March 20, 2007, Enel, acting through its subsidiary Enel North America, acquired
AMP Resources LLC (AMP) from AMP Capital Partners and another minority investor.
The acquisition includes one operational geothermal project and four projects at an
advanced development stage for a total capacity of about 150 MW that Enel North
America will complete over the next four years.
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The projects, located in Nevada, California and Utah, should generate sufficient
renewable power to meet the annual electricity demand of about 100,000 US
households once they are fully operational.
Partnership with Duferco

On March 21, 2007 Enel signed a partnership agreement with Duferco, one of Europe’s
leading steel groups and the top manufacturer of steel and semifinished steel products
in Wallonia (Belgium).
The partnership will start with the development of a project to build a combined-cycle
gas plant with a net capacity of about 420 MW and a power plant that reuses gases
produced in the steel manufacturing process with a capacity of about 65 MW at the
Martinelle-Marchienne industrial site. In addition to covering the Duferco Group’s
energy needs in Belgium, the power plants will provide new generation capacity for the
entire market. To this end, the two partners also plan to establish an electricity sales
operation, as well as to develop additional opportunities in other projects in the region.
Agreement with Acciona Group for joint management of Endesa

On March 26, 2007 Enel signed an agreement with Acciona, one of the leading Spanish
groups operating at the international level in the development and operation of
infrastructure, services and energy from renewables, for the joint management of
Endesa, which thanks to synergies and the exchange of experience will contribute to the
future growth of the Spanish electricity company. The agreement is subject to the
condition that E.On does not acquire more than 50% of Endesa.
Archimede Project with ENEA

On March 26, 2007 Enel signed a protocol of understanding with Italy’s National
Agency for New Technologies, Energy and the Environment (ENEA) on the operational
implementation of the Archimede Project. The initiative involves the construction of a
solar plant at Enel’s power station at Priolo Gargallo (Siracusa). It will be the world’s
first integration of a gas combined-cycle power station with a thermodynamic solar
plant, which will boost the station’s capacity by about 5 MW. The investment will total
more than €40 million, with the facility expected to enter service by the end of 2009.
Agreement between Enel, Acciona and E.On

On April 2, 2007 Enel and Acciona reached an agreement with E.On under which the
latter will withdraw its bid for Endesa and Enel and Acciona will transfer a number of
Endesa and Enel assets to E.On subject to the effective acquisition of control of
Endesa through a public tender and in line with the terms of the March 26, 2007 accord
with Acciona.
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The transfer of the assets to E.On will take place once Acciona and Enel have acquired
control of Endesa and the operation is approved by Endesa’s management and the
necessary official authorizations have been granted.
The withdrawal of E.On’s bid for Endesa enables Enel and Acciona to launch their own
tender immediately. The price offered will be at least €41 per share, plus interest
accrued until the completion of the bid.
Enel possesses the technical and financial resources necessary to meet any
commitments arising in respect of this initiative.
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41. Stock option plans
The following table summarizes developments in 2006 in Enel’s stock option plans,
detailing the main assumptions used in calculating their fair value.
Developments in stock option plans
Number of options 2002 plan 2003 plan 2004 plan 2006 plan Total
Options granted at December 31, 2004 41,748,500 47,624,005 38,527,550 - 127,900,055

Options exercised at December 31, 2004 24,104,556 16,342,119 - - 40,446,675
Options lapsed at December 31, 2004 4,824,000 3,237,700 1,231,000 - 9,292,700
Options outstanding at December 31, 2004 12,819,944 28,044,186 37,296,550 - 78,160,680
Options exercised in 2005 10,697,094 14,158,373 12,392,982 - 37,248,449
Options lapsed in 2005 48,500 50,726 394,500 - 493,726
Options outstanding at December 31, 2005 2,074,350 13,835,087 24,509,068 - 40,418,505
New options granted in 2006 - - - 31,790,000 31,790,000
Options exercised in 2006 1,319,050 11,726,012 6,079,571 - 19,124,633
Options lapsed in 2006 - 60,290 334,300 286,000 680,590
Options outstanding at December 31, 2006 755,300 2,048,785 18,095,197 31,504,000 52,403,282
Fair value at grant date (euro) 0.17 0.37 0.18 0.27

Volatility 28% 28% 17% 14%
Option expiry December 2007 December 2008 December 2009 December 2012
On May 26, 2006, the Enel Ordinary Shareholders’ Meeting approved the 2006 stock
option plan, granting the Board of Directors the powers required to carry out the plan,
to be exercised in accordance with criteria established by the Shareholders’ Meeting.
On August 4, 2006, the Board of Directors of Enel SpA, exercising the authority given
to it by the Shareholders’ Meeting, granted 31,790,000 options to 461 Enel Group
executives. Achievement of the targets set in the 2006 plan will be verified between
2008 and 2009.
As established by the Board of Directors, executives were divided into different

brackets, with each bracket receiving a different number of options. The right to
subscribe the shares is subordinated to the executives concerned remaining employed
within the Group, with a number of exceptions (for example, termination of employment
because of retirement or permanent invalidity, exit from the Group of the company at
which the executive is employed, and succession) specifically governed by the
Regulations.
The options may be exercised subject to a number of specific suspensory conditions.
These include exceeding Group EBITDA forecasts and the performance of Enel shares
with respect to the benchmark index indicated in the Regulations for each plan.
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42. Compensation of directors, members of the Board of Auditors, the
General Manager and managers with strategic responsibilities
The compensation paid to directors, members of the Board of Auditors, the General
Manager and managers with strategic responsibilities of Enel SpA is summarized in the
following table.
The table has been prepared with regard to the period for which the position was held
on an accruals basis. The information regarding managers with strategic
responsibilities is provided in aggregate form, pursuant to the provisions of Article 78
and annex 3C of Consob Resolution no. 11971/1999 (the "Issuers Regulation").
The directors and managers with strategic responsibilities of Enel SpA have waived all
forms of compensation for positions held in subsidiaries.
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Compensation of directors, members of the Board of Auditors, the General Manager and managers with strategic responsibilities
Non- Bonuses and
Period for which monetary other Other
Last name Name Position position was held End of term Remuneration benefits incentives compensation Total
Directors and General Manager

(1) (2)
Gnudi Piero Chairman 1/2006-12/2006 Approv. fin. stat. 2007 735,764.00 11,779.68 747,543.68
(3) (4)
Conti Fulvio CEO and GM 1/2006-12/2006 Approv. fin. stat. 2007 600,000.00 701,678.52 1,301,678.52
Ballio Giulio Director 1/2006-12/2006 Approv. fin. stat. 2007 117,000.00 117,000.00
Fantozzi Augusto Director 1/2006-12/2006 Approv. fin. stat. 2007 116,427.00 116,427.00
Luciano Alessandro Director 1/2006-12/2006 Approv. fin. stat. 2007 117,000.00 117,000.00
Napolitano Fernando Director 1/2006-12/2006 Approv. fin. stat. 2007 117,250.00 117,250.00
Taranto Francesco Director 1/2006-12/2006 Approv. fin. stat. 2007 122,500.00 122,500.00
Tosi Gianfranco Director 1/2006-12/2006 Approv. fin. stat. 2007 117,500.00 117,500.00
Valsecchi Francesco Director 1/2006-12/2006 Approv. fin. stat. 2007 117,000.00 117,000.00
Total compensation of directors and GM 2,160,441.00 11,779.68 - 701,678.52 2,873,899.20
Board of
Auditors
Pinto Eugenio Chair. Board of Auditors 1/2006-12/2006 Approv. fin. stat. 2006 85,000.00 85,000.00
(5)
Conte Carlo Acting Auditor 1/2006-12/2006 Approv. fin. stat. 2006 70,500.00 70,500.00
Fontana Franco Acting Auditor 1/2006-12/2006 Approv. fin. stat. 2006 70,500.00 70,500.00
Total compensation of Board of Auditors 226,000.00 - - - 226,000.00
Managers with strategic

responsibilities (6) 1/2006-12/2006 7,428,332.98 7,428,332.98
Total 2,386,441.00 11,779.68 - 8,130,011.50 10,528,232.18
(1) Insurance policy.

(2) In 2007 the Board of Directors will determine the variable portion of compensation due to the Chairman for 2006 (in an amount of no more than €210,000.00) once achievement of the targets for the Group set for that year has
been verified.
(3) In 2007 the Board of Directors will determine the variable portion of compensation due the Chief Executive Officer for 2006 (in an amount of no more than €600,000.00) once achievement of the targets for the Group set for that
year has been verified.
(4) Fixed compensation for position of General Manager for 2006. In 2007 the Board of Directors will determine the variable portion of compensation due to the General Manager for 2006 (in an amount of no more than
€700,000.00) once achievement of the targets for the Group set for that year has been verified.
(5) Compensation paid to the Ministry for the Economy and Finance in the amount of €55,000.00 pursuant to the Directive of the Presidency of the Council of Ministers – Department of Public Administration of March 1, 2000.
(6) In 2006 the following were managers with strategic responsibilities: heads of Enel SpA Departments, Division heads, the head of business development of the International Division and the head of the Energy Management
business area of the Domestic Generation and Energy Management Division, for a total of 15 management positions.
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Attachments
Report on corporate governance
Section 1: Governance structure
Introduction
During 2006, the corporate governance system in place in the Company and the Group
was updated with the intention of ensuring that it both conforms to the recommendations
expressed in the new edition of the Self-regulation Code of Italian listed companies
promoted by Borsa Italiana, published in March 2006 (hereinafter, for the sake of brevity,
the “Self-regulation Code”) and corresponds to the recommendations made in this regard
by the Consob and, more generally, to international best practice.
The aim of this corporate governance system is essentially the creation of value for the
shareholders, taking into account the social importance of the Group’s activities and
the consequent need, in carrying them out, to adequately consider all the interests
involved.
Ownership structure
The capital stock of the Company consists exclusively of registered ordinary shares
fully paid up and entitled to full voting rights at both Ordinary and Extraordinary
Shareholders’ Meetings.
According to the entries in the stock register and the information available as of March
2007, no shareholder – with the exception of the Italian Ministry of the Economy and
Finance, which owns 21.12% of the share capital, and the Cassa Depositi e Prestiti (a
joint-stock company controlled by the aforesaid Ministry), which owns 10.15% of the
share capital – owns more than 2% of the Company’s share capital, nor, to the
Company’s knowledge, do any agreements regarding Enel’s shares exist among its
shareholders.
The Company is therefore subject to the de facto control of the Ministry of the Economy
and Finance. However, the latter has declared that it is not in any way involved in
managing and coordinating the Company.
Both the Assicurazioni Generali group (during June 2006) and the Banca Intesa group
(during November 2006) have been temporarily in possession of a shareholding
constituting slightly more than 2% of the Company’s share capital.
Limit to the ownership of shares

Implementing a provision of the regulations regarding privatizations, the Company’s
bylaws provides that – except for the government, public bodies, and parties subject to
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their respective control – no shareholder may own, directly ot indirectly, Enel shares
that constitute more than 3% of the share capital.
The voting rights regarding the shares owned in excess of the aforesaid limit of 3%
may not be exercised and the voting rights to which each of the parties concerned by
the limit to share ownership would have been entitled will be proportionately reduced,
unless there are prior joint instructions from the shareholders concerned. In case of
noncompliance, resolutions of Shareholders’ Meetings may be challenged in court if
the majority required would not have been attained without the votes expressed in
excess of the aforesaid limit.
According to the regulations regarding privatizations, the provision of the bylaws
concerning the limit to share ownership will lapse if the limit of 3% is exceeded
following certain kinds of public tender offers regulated by the Unified Financial Act.
Special powers of the Italian government

Implementing the provisions of the regulations regarding privatizations, the Company’s
bylaws assigns the Italian government (represented for this purpose by the Ministry of
the Economy and Finance) several “special powers”, which are exercisable regardless
of the number of Enel shares owned by the aforesaid Ministry.
Specifically, the Ministry of the Economy and Finance, in agreement with the Ministry of
Productive Activities, has the following “special powers”, to be used according to the
criteria established by the Prime Minister’s Decree of June 10, 2004:
opposition to the acquisition of significant shareholdings (that is to say, amounting
to or exceeding 3% of Enel’s share capital) by parties to whom the aforesaid limit to
share ownership applies. Grounds for the opposition must be given and the
opposition may be expressed only in cases in which the Ministry considers the
transaction to be in actual fact detrimental to vital national interests;
opposition to shareholders’ agreements referred to in the Unified Financial Act if
they concern 5% or more of Enel’s share capital. In this case, too, grounds must be
given for the opposition, which may be expressed only in cases in which the
shareholders’ agreements are liable to cause concrete detriment to vital national
interests;
veto of the adoption of resolutions liable to have a major impact on the Company
(by which is understood resolutions to wind up, transfer, merge, or split up the
Company or to move its headquarters abroad or change its corporate purpose, as
well as those aimed at abolishing or changing the content of the “special powers”).
Grounds for the veto must in any case be given and the veto may be exercised only
in cases in which such resolutions are liable to cause concrete detriment to vital
national interests;
appointment of a director without the right to vote.
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Organizational structure
In compliance with current regulations applicable in Italy to companies with listed
shares, the organizational structure of the Company includes:
a Board of Directors entrusted with the management of the Company;
a Board of Statutory Auditors responsible for (i) ensuring compliance with the law and
the Company’s bylaws, as well as the observance of correct management principles
in the carrying out of the Company’s activities, (ii) checking the adequacy of the
Company’s organizational structure, internal auditing system, and administration and
accounting system, and (iii) ascertaining how the corporate governance rules
provided for by the Self-regulation Code are actually implemented;
Shareholders’ Meetings, called to resolve – in either an Ordinary or an
Extraordinary session – inter alia on (i) the appointment and removal of members of
the Board of Directors and the Board of Statutory Auditors, as well as their
compensation and responsibilities, (ii) the approval of the financial statements and
the allocation of net income, (iii) the acquisition and sales of own shares, (iv) stock-
option plans, (v) amendments to the Company’s bylaws, and (vi) the issue of
convertible bonds.
The external audit of the Company’s accounts is entrusted to a specialized firm
registered with the Consob and expressly elected, after the Board of Statutory Auditors
has made a grounded proposal, by a Shareholders’ Meeting. Enel’s external auditor is
entrusted with the same task at the other Group companies.
In addition to the prohibition regarding the performance of specific kinds of services
imposed on auditing firms by the Unified Financial Act (with provisions introduced at
the end of 2005), the Group’s code of ethics has for some time established that the
external audit of the Company’s financial statements and of the consolidated financial
statements is incompatible with the performance of consulting activities for any Group
company and such incompatibility extends to the external auditor’s entire network.
*****
Section 2: Implementation of the recommendations of the Self-regulation

Code and additional information
Board of Directors
Role and powers

The Company’s Board of Directors plays a central role in the Company’s organization
and is entrusted with the powers and the responsibility for strategic and organizational
policies, as well as with verifying the existence of the controls necessary for monitoring
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the performance of the Company and the Group. In consideration of its role, the Board
of Directors meets regularly and is organized and works so as to ensure the effective
performance of its duties.
In this context, and in accordance with the provisions of the law and specific resolutions
of its own (and, in particular, of the one adopted in November 2005), the Board of
Directors:
establishes the corporate governance system for the Company and the Group and
sees to the constitution and definition of the duties of the Board’s internal
committees, whose members it appoints;
delegates and revokes the powers of the Chief Executive Officer, defining their
content, limits, and the procedures, if any, for exercising them. In accordance with
the delegations in force, the Chief Executive Officer is vested with the broadest
powers for the management of the Company, with the exception of those assigned
otherwise by the law or the Company’s bylaws or that are reserved to the Board of
Directors according to the resolutions of the latter, which are described below;
receives, together with the Board of Statutory Auditors, constant and exhaustive
information from the Chief Executive Officer regarding the activities carried out in
the exercise of his powers, which is summarized in a special quarterly report. In
particular, with regard to all the most significant transactions carried out using the
powers of his office (including atypical or unusual transactions or transactions with
related parties whose approval is not reserved to the Board of Directors), the Chief
Executive Officer reports to the Board on (i) the features of the transactions, (ii) the
parties concerned and any relation they might have with the Group companies, (iii)
the procedures for determining the considerations concerned, and (iv) the related
effects on the income statement and the balance sheet;
determines, on the basis of the proposals made by the dedicated Committee and
after receiving the opinion of the Board of Statutory Auditors, the compensation of
the Chief Executive Officer and of the other Directors who hold specific offices;
evaluates, on the basis of the analyses and proposals made by the dedicated
Committee, the criteria adopted for the compensation of the Company’s and the
Group’s executives with strategic responsibilities and decides with regard to the
adoption of the stock-option plans addressed to executives to be submitted to
Shareholders’ Meetings for approval;
evaluates the adequacy of the Company’s and the Group’s organizational,
administrative, and accounting structure and resolves on the changes in the
organizational structure proposed by the Chief Executive Officer;
establishes the corporate structure of the Group and checks if it is appropriate;
215
examines and approves the strategic, business, and financial plans of the Company
and the Group. In this regard, the current division of powers within the Company
specifically provides for the Board of Directors to resolve on the approval of:
- the annual budget and the long-term plan (which include the aggregates of the
annual budgets and long-term plans of the Group companies);
- strategic agreements, also determining – upon proposal by the Chief Executive
Officer and after the Chairman has expressed his opinion – the strategic
objectives of the Company and the Group;
examines and approves beforehand the transactions of the Company and the
Group that have a significant impact on their strategy and on their balance sheets,
income statements, and cash flows, particularly in cases where they are carried out
with related parties or otherwise characterized by a potential conflict of interest.
In particular, all financial transactions of a significant size – by which is meant
taking on loans exceeding the value of euro 50 million, as well as granting loans
and issuing guarantees in favor of third parties exceeding the value of euro 25
million – must be approved beforehand (if they concern the Company) or evaluated
(if they regard Group companies) by the Board of Directors.
In addition, the acquisition and disposal of equity investments amounting to more
than euro 25 million must be approved beforehand (if they are carried out directly
by the Company) or evaluated (if they concern Group companies) by the same
Board of Directors. Finally, the latter approves agreements (with ministries, local
governments, etc.) that entail expenditure commitments exceeding euro 25 million;
provides for the exercise of voting rights at Shareholders’ Meetings of the
companies directly controlled by the Parent Company and designates the Directors
and Statutory Auditors of the aforesaid companies;
appoints the General Manager and grants the related powers;
evaluates the general management of the Company and the Group, with particular
reference to conflicts of interest, using the information received from the Chief
Executive Officer and verifying periodically the achievement of the objectives set;
formulates proposals to submit to Shareholders’ Meetings and reports during the
latter on the activities that have been carried out and planned, seeing that the
shareholders have adequate information on the elements necessary for them to
participate in a well-informed manner in the decisions that are within the authority of
such Meetings.
Appointment, composition, and term

Pursuant to the provisions of the Company’s bylaws, the Board of Directors consists of
from three to nine members, who are appointed for a term not exceeding three
accounting periods and may be reappointed at the expiration of their term. To them
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may be added a non-voting Director, whose appointment is reserved to the Italian
government in virtue of the legislation regarding privatizations and a specific provision
of the bylaws (as previously explained). To date, the Italian government has not
exercised this power of appointment.
According to the current legislation, Directors must possess the requisites of
honorableness required of (i) company representatives of financial intermediaries, as
well as (ii) statutory auditors of listed companies.
In compliance with the legislation regulating privatizations and in accordance with the
amendments made at the end of 2005 to the Unified Financial Act, the bylaws also
provide for the appointment of the entire Board of Directors to take place according to
the “slate-vote” mechanism aimed at ensuring the presence on the Board of Directors
of members nominated by minority shareholders amounting to three-tenths of the
Directors to be elected. In the event this number is a fraction, it is to be rounded up to
the nearest integer.
This electoral system currently provides that slates of candidates may be presented by
the outgoing Board of Directors or by shareholders who, individually or together with
other shareholders, represent at least 1% of the share capital. The slates are filed at
the Company’s registered office and published in newspapers with a nation-wide
circulation sufficiently in advance of the date of the Shareholders’ Meeting concerned –
20 days in advance being the deadline if the slate is presented by the outgoing Board
of Directors and 10 days if the slates are presented by shareholders – thus ensuring a
transparent process for the appointment of the Board of Directors. In this regard, it
should be noted that, beginning with the next election of the Board of Directors,
shareholders will be requested to file their slates at least 15 days before the date of the
Shareholders’ Meeting in compliance with the recommendations of the Self-regulation
Code, as will be specifically noted in the notice of the Meeting.
A report with exhaustive information regarding the personal and professional
characteristics of the candidates, accompanied by a statement of whether or not the
latter qualify as independent pursuant to the law and the Self-regulation Code, is to be
filed at the Company’s registered office at the same time as the slates, as well as
published promptly on the Company’s web, as noted specifically in the notice of the
Shareholders’ Meeting.
The Board of Directors confirmed (in December 2006) that it can defer the creation
within itself of a special nomination committee, because to date there has been no
evidence that it is difficult for shareholders to find suitable candidates, so as to achieve
a composition of the Board of Directors corresponding to the recommendations of the
Self-regulation Code.
As resolved by the ordinary Shareholders’ Meeting of May 26, 2005, the incumbent
Board of Directors consists of nine members, whose term expires when the financial
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statements for 2007 are approved. As a result of the appointments made at the
aforesaid Shareholders’ Meeting, the Board thus currently consists of the following
members, whose professional profiles are summarized below, together with the
specification of the slate on which each of them was nominated:
• Piero Gnudi, 68, Chairman (designated on the slate presented by the Ministry of
the Economy and Finance).
A graduate in economics and commerce (1962) of the University of Bologna and
proprietor of an accounting firm located in Bologna, he has served on the board of
directors and the board of statutory auditors of numerous important Italian companies,
including STET, ENI, Enichem, and Credito Italiano. In 1995, he was appointed
economic advisor to the Ministry of Industry. Since 1994, he has been on the board of
directors of IRI, where he has also held the positions of supervisor of privatizations
(1997) and chairman and chief executive officer (1999); later, from 2000 to 2002, he
served as chairman of the IRI liquidation committee. A member of the executive of
Confindustria, the steering committee of Assonime (an association of Italian
corporations), the executive committee of the Aspen Institute, the committee on
corporate governance of listed companies – reconstituted on the initiative of Borsa
Italiana in April 2005), and president of the Mediterranean Energy Observatory (OME),
he currently holds also the positions of chairman of Emittenti Titoli, director of
Unicredito Italiano, and government commissioner of the Fochi Group, which is under
special management. He has been Chairman of the Board of Directors of Enel since
May 2002.
• Fulvio Conti, 59, Chief Executive Officer and General Manager (designated on the
slate presented by the Ministry of the Economy and Finance).
A graduate of the University of Rome “La Sapienza” with a degree in economics and
commerce, in 1969 he joined the Mobil Group, where he held a number of executive
positions in Italy and abroad and in 1989-90 was in charge of finance for Europe. The
head of the accounting, finance, and control department of Montecatini from 1991 to
1993, he subsequently was in charge of finance at Montedison-Compart (between
1993 and 1996), overseeing the financial restructuring of that group. The general
manager and chief financial officer of the Italian National Railways between 1996 and
1998, he also held important positions in other companies of that group (including
Metropolis and Grandi Stazioni). Vice-chairman of Eurofima in 1997, in 1998-99 he was
general manager and chief financial officer of Telecom Italia, holding also in this case
important positions in other companies of that group (including Finsiel, TIM, Sirti, Italtel,
Meie, and STET International). From 1999 to June 2005, he was Enel’s Chief Financial
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Officer. He has been the Chief Executive Officer and General Manager of Enel since
May 2005, and currently is also a director of Barclays Plc.
• Giulio Ballio, 67, Director (designated on the slate presented by institutional

investors).
A graduate (1963) with a degree in aeronautical engineering of the Milan Polytechnic
Institute, he has also made his academic career there. A professor since 1975, since
1983 he has held the chair of steel construction at the school of engineering and since
2002 has been president of the institute. The author of many publications (which have
also been published abroad), he has carried on an extensive scientific activity.
Alongside his academic activity, since 1964 he has worked with several engineering
firms and in 1970 founded an engineering services company (B.C.V. Progetti), where
he has been involved in numerous projects as designer, site engineer, and consultant,
both in Italy and abroad. A member of the National Research Council’s committee on
regulations for constructing with steel from 1970 to 2000, he was a member of the
Board of Steel Experts from 1975 to 1985 and chairman in 1981-82, as well as a
member of the chairman’s council of the Italian Calibration Service from 1997 to 2002.
He has been involved in the renovation of several important monumental buildings
(including the Academia Bridge in Venice) and has coordinated research activities in
the field of construction both in Italy and abroad. He has been a Director of Enel since
May 2005.
• Augusto Fantozzi, 66, Director (designated on the slate presented by institutional

investors).
A graduate (1963) in law from the University of Rome “La Sapienza”, he is a lawyer
and the owner of a law firm with offices in Rome, Milan, Bologna, and Lugano, as well
as a professor of tax law at “La Sapienza” and the LUISS “Guido Carli”. The Minister of
Finance from January 1995 to May 1996 in Prime Minister Lamberto Dini’s Cabinet –
where for several months he also held the offices of Minister of the Budget and
Economic Planning and Minister for the Coordination of E.U. Policies – he was
subsequently the Minister of Foreign Trade in Prime Minister Romano Prodi’s Cabinet
(from May 1996 to October 1998). A member of the Chamber of Deputies in the
thirteenth legislature (from May 1996 to May 2001), he was chairman of the Budget,
Treasury, and Economic Planning Committee (from September 1999). He has been
vice-president of the Finance Council, president of the Ascotributi, and a member of the
Consulta of Vatican City. A former chairman of the technical committee of the
International Fiscal Association, he is the author of numerous publications and has
been a member of the editorial board of Italian and international law reviews. He has
also been on the board of directors of numerous companies, including the Benetton
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group, Lloyd Adriatico, and Citinvest, and currently holds the office of deputy chairman
of the board of directors of Banca Antonveneta. He has been a Director of Enel since
May 2005.
• Alessandro Luciano, 55, Director (designated on the slate presented by the

Ministry of the Economy and Finance).
After graduating from law school, he earned a master’s degree in economics and
finance in London. A lawyer, he began his career in 1974, consulting in currency law
for leading Italian and foreign banks and pleading before the Currency Commission of
the Treasury Ministry. At the same time, he was also concerned with the incorporation
of companies and with loans from abroad, contributing to the conclusion of several
transactions in favor of industries, insurance groups, and state-owned companies.
Starting in 1984 he began extending his sphere of activity to the telecommunications
industry, where he has been involved with entrepreneurial as well as financial and
technical aspects. Formerly a consultant of STET, Techint, Snam Progetti, Aquater,
Comerint, and the American company DSC Communications (on behalf of which he
participated in trial studies in Italy for the ISDN, MDS, Airspan, and Video-on-demand
systems), he has also been vice president of two committees of the Italian Soccer
Federation. From October 1998 to March 2005, he was a commissioner of the Italian
Communications Authority, where he was a member of the Board and of the
Infrastructure and Networks Committee. At the Authority he was concerned with,
among other things, the development, competition, and interconnection of
communication networks, resolving disputes between telecommunications companies
and their users. In June 2005, he became the chairman of the board of directors of
Centostazioni (Italian National Railways group). He has been a Director of Enel since
May 2005.
• Fernando Napolitano, 42, Director (designated on the slate presented by the

A graduate in economics and commerce (1987) of the University of Naples, he
completed his studies in the United States, earning at first a master’s degree in
management at Brooklyn Polytechnic University and later attending the advanced
management program at Harvard Business School. He began his career by working in
the marketing division of Laben (Finmeccanica group) and then that of Procter &
Gamble Italia. In 1990 he joined the Italian office of Booz Allen Hamilton, a
management and technology consulting firm, where he was appointed partner and
vice-president in 1998. Within this office he was in charge of developing activities in the
fields of telecommunications, media, and aerospace, while also gaining experience in
Europe, the United States, Asia, and the Middle East. He is currently chief executive
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officer of Booz Allen Hamilton Italia and also carries out assignments with an
international scope. From November 2001 to April 2006, he has served on the
committee for surface digital television instituted by the Communications Ministry and
from July 2002 to September 2006 has been a director of the Italian Center for
Aerospace Research. He has been a Director of Enel since May 2002.
Francesco Taranto, 66, Director (designated on the slate presented by institutional

investors).
He began his career in 1959 in the office of a stockbroker in Milan and subsequently
(from 1965 to 1982) worked at the Banco di Napoli, where he eventually became head
of the marketable securities service. He then held numerous executive positions in the
mutual funds industry, where he was first in charge of investment management at
Eurogest (from 1982 to 1984) and then general manager of Interbancaria Gestioni
(from 1984 to 1987). After that he worked for the Prime group (from 1987 to 2000),
serving for a long time as chief executive officer of the parent company. He has also
been a member of the steering committee of Assogestioni and a member of the
committee for the corporate governance of listed companies sponsored by Borsa
Italiana. A Director of Enel since October 2000, he currently holds the same office at
Banca Carige, Cassa di Risparmio di Firenze, Unicredit Xelion Banca, Pioneer Global
Asset Management (part of the Unicredito Group), Kedrios, and Alto Partners SGR.
Gianfranco Tosi, 59, Director (designated on the slate presented by the Ministry of
the Economy and Finance).
A graduate in mechanical engineering (1971) of the Polytechnic Institute of Milan, since
1972 he has held a number of positions at the same institute, becoming professor of
iron metallurgy in 1982 and from 1992 also giving the course on the technology of
metal materials (together with the same position at the University of Lecco). The author
of more than 60 publications, he has been extensively involved in scientific activities. A
member of the board of directors of several companies and consortia, he has also held
positions in associations, including the vice-presidency of the Gruppo Giovani
Federlombarda (with duties as regional delegate on the Comitato Centrale Giovani
Imprenditori instituted within the Confindustria) and the office of member of the
executive committee of the Unione Imprenditori of the Province of Varese. From
December 1993 to May 2002, he was mayor of the city of Busto Arsizio. The president
of the Center for Lombard Culture, established by the Lombardy Region to defend and
develop the local culture, he is also a member of the association of journalists. He has
been a Director of Enel since May 2002.
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Francesco Valsecchi, 42, Director (designated on the slate presented by the
After graduating with honors (1987) with a degree in law from the University of Rome
“La Sapienza”, he held a number of positions both there and at the LUISS “Guido Carli”
in Rome regarding specifically the field of commercial law. From 1990 to 1992, he was
the academic coordinator of the course for corporate lawyers organized by the LUISS
business school. A lawyer and the author of several publications, since November
2001 he has been a member of the committee on the reform of civil trials instituted by
the Ministry of Justice and since March 2002 has taught at the Civil Service School.
Since December 1994 he has been an extraordinary member of the Technical Council
of the Communications Ministry and since April 2003 has been on the committee of
experts of the High Commission for the coordination of public finance and the tax
system. A member of the board of directors of the Italian Postal Service (from May
2002 to May 2005), he has subsequently held important positions in several companies
of such group, including the chairmanship of BancoPosta Fondi SGR (since April 2003)
and Postecom (from July 2002 to April 2003). He has been a Director of Enel since
May 2005.
The Directors are aware of the duties and responsibilities connected with the office
they hold and are kept constantly informed by the relevant corporate departments of
the most important legislative and regulatory changes concerning the Company and
performance of their duties. In order to be able to perform their role even more
effectively, they also participate in initiatives aimed at increasing their knowledge of the
reality and dynamics of the Company.
The Directors perform their duties with full knowledge of the facts and in complete
autonomy, pursuing the primary objective of creating value for the shareholders within
a medium-long time frame.
Limit to the number of offices held by Directors

The Directors accept their office and maintain it in the belief that they can dedicate the
necessary time to the diligent performance of their duties, taking into account both the
number and the nature of the offices they hold on the boards of directors and the
boards of statutory auditors of other companies of significant size and the commitment
required by the other professional activities they carry on and the offices they hold in
associations.
In this regard, it should be noted that in December 2006, the Board of Directors
approved (and formalized in a specially provided document) a policy regarding the
maximum number of offices that its members may hold on the boards of directors and
the boards of statutory auditors in other companies of significant size in order to ensure
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that the persons concerned have sufficient time available to ensure the effective
performance of the role they have on the Board of Directors of Enel.
Following the recommendations of the Self-regulation Code, the aforesaid policy
considers to this end the offices held on the boards of directors and boards of statutory
auditors of the following kinds of companies:
a) companies with shares listed on regulated markets, including foreign ones;
b) Italian and foreign companies with shares not listed on regulated markets and doing
business in the fields of insurance, banking, securities intermediation, mutual funds,
or finance (as far as the last field is concerned, only with regard to finance
companies subject to the prudential supervision of the Bank of Italy and entered on
the special list referred to in article 107 of the Unified Banking Act);
c) other Italian and foreign companies with shares not listed on regulated markets
that, even though they do business in fields other than those specified under letter
b) above, have assets exceeding euro 1 billion or revenues exceeding euro 1.7
billion according to the latest approved financial statements.
In accordance with the recommendations of the Self-regulation Code, the policy
formulated by the Board of Directors thus establishes differentiated limits to the number
of offices (made measurable by a system of specific “weights” for each kind of office)
depending on (i) the commitment connected with the role performed by each Director
both on the Board of Directors of Enel and on the boards of directors and the boards of
statutory auditors of other companies of significant size, as well as (ii) the nature of the
companies where the other roles are performed, excluding from the related calculation
those performed in Enel’s subsidiaries and affiliates.
On the basis of the information provided by the Directors of the Company to implement
the aforesaid policy, it has been ascertained that each of them currently holds a
number of offices on the boards of directors and boards of statutory auditors of other
companies of significant size that is compatible with the limits established by the same
policy.
Board Meetings and the role of the Chairman

In 2006 the Board of Directors held 16 meetings, which lasted an average of more than
3 hours and 30 minutes each. Director participation was regular and the meetings were
also attended by the Board of Statutory Auditors and by the magistrate representing
the Court of Accounts. As far as 2007 is concerned, as of the month of March 9
meetings have been held (with respect to the 4 that were scheduled), while for the rest
of the year 10 more Board meetings are planned.
The activities of the Board of Directors are coordinated by the Chairman, who calls its
meetings, establishes their agenda, and presides over them, ensuring that – except in
cases of urgency and necessity – the necessary documents and information are
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provided to the Board members in time for the Board to express its informed opinion on
the matters under examination. He also ascertains whether the Board’s resolutions are
implemented, chairs Shareholders’ Meetings, and – like the Chief Executive Officer – is
empowered to represent the Company legally.
In short, the Chairman’s role is to stimulate and supervise the functioning of the Board
of Directors as part of the fiduciary powers that make him the overseer for all
shareholders of the legality and transparency of the Company’s activities.
According to a Board resolution of November 2005, the Chairman is also entrusted with
the duties of (i) participating in the formulation of corporate strategies in agreement with
the Chief Executive Officer, the powers granted the latter by the Board of Directors
being understood, as well as (ii) overseeing auditing in agreement with the Chief
Executive Officer, with the internal auditing department remaining under the latter. In
this regard, however, it is provided that decisions concerning the appointment and
revocation of the head and top executives of the aforesaid department are to be made
jointly by the Chairman and the Chief Executive Officer.
Finally, in agreement and coordination with the Chief Executive Officer, the Chairman
maintains relations with institutional bodies and authorities.
Evaluation of the functioning of the Board of Directors and the Committees

In the second half of 2006, with the assistance of a specialized company, the Board of
Directors began (and completed in February 2007) an evaluation of the size,
composition, and functioning of the Board and its Committees (so-called board review),
in accordance with the most advanced practices of corporate governance found abroad
and adopted by the Self-regulation Code.
Conducted by means of a questionnaire filled out by each Director and followed by
individual interviews carried out by the consultancy firm, the analysis focused on
numerous aspects regarding the Board of Directors, such as: (i) the structure,
composition, role, and responsibilities of the body; (ii) the conduct of Board meetings,
the related flow of information, and the decision-making procedures adopted; (iii) the
functioning and composition of the Committees formed within the Board of Directors;
(iv) the strategies pursued and the performance objectives set; (v) the relations
between the Board, the shareholders, and the stakeholders; and (vi) the Company’s
organizational structure and the plans of management turnover adopted.
Among the most positive aspects that emerged from the board review was, first of all,
the atmosphere of great cohesiveness existing on the Board of Directors, which
facilitates open and constructive discussion that is respectful of the contribution of each
Director and tends to converge towards decisions characterized by broad agreement. It
was also reported that the Board’s decision-making process is supported by flows of
information that the Directors consider timely and effective (although capable of
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improvement from both points of view), with the minutes being drawn up precisely. The
Directors also gave an essentially positive evaluation of the ease with which they had
access to the Chief Executive Officer and the Chairman, as well as of the role the latter
performs as the person who ensures the application of sound corporate governance
within the Board. The structure of the Board of Directors and the number of Board
meetings were considered appropriate and – like the long-term strategic objectives – it
was thought that the short-to-medium-term operating and performance objectives were
clearly established. As far as the Committees formed within the Board are concerned,
there was wide agreement about their role, the effectiveness of their activity, and the
appropriateness of their composition.
Among the aspects that could be improved – and on which the Board of Directors will
focus its attention in 2007 – were thought to be the need for greater agreement by the
Board on the most important decisions, as well as with regard to the adequacy of the
Company’s organizational structure and the plans of management turnover. Finally, the
Directors hoped that the length of the Board meetings (on average, 2 hours and 30
minutes each in 2005) would be increased so that the important issues on the agenda
could be discussed more thoroughly.
Following up on the needs that emerged from the board review which had been carried
out in 2004, it was considered advisable to organize again in 2006 a special strategic
meeting, which took place in November and was dedicated to the analysis and in-depth
study by the Board of Directors of the Company’s and Group’s long-term strategies.
Non-executive Directors
The Board of Directors consists of executive and non-executive Directors.
In accordance with the recommendations of the Self-regulation Code, the following are
considered executive Directors:
the Chief Executive Officer of the Company (or of strategically significant Group
companies), as well as the related Chairman who has been granted individual
powers of management or who has a specific role in the formulation of the
Company’s strategies;
Directors who hold executive positions in the Company (or in strategically
significant Group companies) or in the controlling entity, if the position also regards
the Company.
The Directors who do not correspond to any of the aforesaid categories can be termed
non-executive.
According to the analysis carried out by the Board of Directors in December 2006, with
the exception of the Chairman and the Chief Executive Officer, the other 7 members of
the Board of Directors currently in office (Giulio Ballio, Augusto Fantozzi, Alessandro
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Luciano, Fernando Napolitano, Francesco Taranto, Gianfranco Tosi and Francesco
Valsecchi) can be termed non-executive Directors.
As far as the Chairman is concerned, it should be noted that the characterization of the
latter as an executive Director derives from the specific role that the current division of
powers assigns him with regard to the formulation of the Company’s strategies, while
the person concerned does not have any individual powers of management.
The number, expertise, authoritativeness and availability of time of the non-executive
Directors are therefore sufficient to ensure that their judgment can have a significant
influence on the decisions made by the Board.
The non-executive Directors bring their specific expertise to the Board’s discussions,
so as to facilitate an examination of the subjects under discussion from different
perspectives and consequently well-considered and well-informed decisions that
correspond to the corporate interest.
Independent Directors
Basing itself on the information provided by the individual persons concerned or, in any
case, at the Company’s disposal, in December 2006 the Board of Directors attested
that all the non-executive Directors qualify as independent.
Specifically, independent directors are defined as those who do not have, nor have
recently had, even indirectly, relations with the Company or with parties connected with
the Company that could condition independence of judgment at the present time.
In evaluating the independence of the non-executive Directors, the Board of Directors
took into account the cases in which, according to the Self-regulation Code, the
requisite of independence should be considered lacking and applied in this respect the
principle of the prevalence of substance over form recommended by the Code itself.
When it carried out its review in December 2006, the Board of Directors was able to
ascertain that all the non-executive Directors also possessed the requisites of
independence provided for the statutory auditors of listed companies, in accordance
with the amendments to the Unified Financial Act made at the end of 2005.
In March 2007, the Board of Statutory Auditors ascertained that, in carrying out the
aforesaid evaluation of the independence of its non-executive members, the Board of
Directors correctly applied the criteria recommended by the Self-regulation Code,
following for that purpose a transparent assessment procedure that enabled the Board
to learn about relations that were potentially significant for the purpose of the
evaluation of independence.
The independent Directors held their first meeting without the other Directors present in
February 2007.
In December 2006, the Board of Directors also ascertained the absence of the
conditions that, according to the Self-regulation Code require the institution of a lead
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independent director, in consideration of the fact that at Enel the Chairman of the
Board of Directors is not the chief executive officer, nor does he own a controlling
interest in the Company.
Although independence of judgment characterizes the activity of all the Directors,
whether executive or not, an adequate presence (in terms of both number and
expertise) of Directors who qualify as “independent” according to the aforesaid
definition and have significant roles on both the Board of Directors and its Committees
is considered a suitable means for ensuring that the interests of all the shareholders
are appropriately balanced.
Committees
In order to ensure that it performs its duties effectively, as early as January 2000 the
Board of Directors set up as part of itself a Compensation Committee and an Internal
Control Committee, assigning them both advisory and proactive duties and entrusting
them with issues that are sensitive and sources of possible conflicts of interest.
Each Committee consists of at least 3 non-executive Directors, the majority of whom
are independent, and are appointed by the Board of Directors, which names one of
them as coordinator and also establishes the duties of the Committee by a special
resolution.
In December 2006, the Board of Directors approved special organizational regulations
that govern the composition, tasks, and working procedures of each Committee.
The Committees in question are empowered to access the information and corporate
departments necessary to perform their duties and make avail themselves of outside
consultants at Company’s expense within the limits of the budget approved by the
Board of Directors.
Each Committee appoints a secretary, who need not be one of its members, who is
entrusted with the task of drawing up the minutes of the meetings.
The meetings of each Committee may be attended by the members of the other
Committee, as well as by other members of the Board of Directors or other persons,
invited by the related coordinator, whose presence may help the Committee to perform
its duties better.
The meetings of the Internal Control Committee are also attended by the Chairman of
the Board of Statutory Auditors or another Statutory Auditor designated by him (in
consideration of the specific duties regarding the supervision of the internal control
system with which the aforesaid Board is entrusted by the laws in force concerning
listed companies) and, as from December 2006, the Chairman of the Board of
Directors (in his capacity as an executive Director entrusted with supervising the
functioning of the internal control system). The head of internal auditing may also
attend the aforesaid meetings.
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Compensation Committee
The Compensation committee is entrusted first of all with the task of ensuring that the
compensation of the Directors is established in an amount that is sufficient to attract,
retain, and motivate Directors endowed with the professional qualities required for
successfully managing the Company.
In this regard, the Committee must ensure that a significant portion of the
compensation of the executive Directors and executives with strategic responsibilities
is tied to the economic results achieved by the Company and the Group, as well as the
attainment of specific objectives established beforehand by the Board of Directors, or –
with regard to the aforesaid executives – by the Chief Executive Officer, in order to
align the interests of the persons concerned with the pursuit of the primary objective of
creating value for the shareholders in a medium-to-long time frame.
The Compensation Committee also ensures that the compensation of the non-
executive Directors is commensurate with the commitment required of each of them,
taking into account their participation on the Committees. It should be noted in this
regard that, in line with the recommendations of the Self-regulation Code, this
compensation is in no way tied to the economic results achieved by the Company and
the Group and that the non-executive Directors are not beneficiaries of the stock-option
plans.
Specifically, then, the Compensation Committee is entrusted with the following tasks,
which are both advisory and proactive (as last redefined by the Board of Directors in
December 2006 to implement the recommendations of the Self-regulation Code):
to present proposals to the Board of Directors for the compensation of the Chief
Executive Officer and the other Directors who hold particular offices, monitoring the
application of the resolutions adopted by the Board. It should be noted in this
regard that the Directors in question are not allowed to attend the meetings of the
Committee at which the proposals regarding the related compensation to present to
the Board of Directors are formulated;
to periodically review the criteria adopted for the compensation of executives with
strategic responsibilities, monitor their application on the basis of the information
provided by the Chief Executive Officer and formulate general recommendations for
the Board of Directors on the matter.
As part of its duties, the Compensation Committee also plays a central role in
elaborating and monitoring the performance of stock-option plans addressed to
executives and conceived as instruments for providing incentives for them and making
them loyal, which are aimed at attracting and motivating resources with appropriate
ability and experience and further developing their sense of belonging and ensuring
their constant, enduring effort to create value. The 2006 stock-option plan, which was
drawn up by the Compensation Committee and then submitted by the Board of
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Directors to the Shareholders’ Meeting for its approval, also included among
beneficiaries the Company’s Chief Executive Officer in his capacity as General
Manager.
In addition to those recommended by the Self-regulation Code, the Compensation
Committee also performs the function of assisting the Chief Executive Officer and the
relevant corporate departments in developing the potential of the Company’s
managerial resources, recruiting talented people, and promoting related initiatives with
universities.
In 2006, the Compensation Committee (i) consisted entirely of non-executive and
independent Directors in the persons of Francesco Taranto (who acts as coordinator),
Giulio Ballio, Fernando Napolitano, and Gianfranco Tosi, (ii) held 10 meetings, which
all of its members attended regularly and which lasted an average of 1 hour and 10
minutes, and, finally, (iii) called on external consultants at the Company’s expense.
During 2006, the Compensation Committee – in addition to elaborating the stock-option
plan for that year – worked on establishing the applicative aspects of the variable
component of the compensation of the Chief Executive Officer and the Chairman, in
particular setting the annual economic and managerial objectives to assign them. The
Committee also reviewed the compensation policies and the management methods of
executives in place in the Company and the Group (carrying out in this regard
benchmark comparisons with the compensation paid by companies comparable to
Enel) and examined in depth the different kinds of incentives that may be used in the
light of the new tax regime regarding stock options.
Internal Control Committee

The Internal Control Committee has the task of assisting the Board of Directors in the
latter’s evaluations and decisions regarding the internal control system, the approval of
the financial statements and the half-year report, and the relations between the
Company and the external auditor by preliminarily gathering the relevant facts.
Specifically, the Internal Control Committee is entrusted with the following tasks, which
are both advisory and proactive (as last redefined by the Board of Directors, in
December 2006 to implement the recommendations of the Self-regulation Code):
to assist the Board of Directors in performing the tasks regarding internal control
entrusted to the latter by the Self-regulation Code;
to evaluate, together with the executive in charge of preparing the corporate
accounting documents and the external auditors, the proper use of accounting
principles and their uniformity for the purpose of drawing up the consolidated
financial statements;
to express opinions, upon request by the executive Director who is assigned the
task, on specific aspects regarding the identification of the Company’s and Group’s
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main risks, as well as the planning, implementation, and management of the
internal control system;
to examine the work plan prepared by the head of internal auditing, as well as the
latter’s periodical reports;
to assess the proposals made by auditing firms to obtain the related assignment, as
well as the work plan prepared for the external audit and the results expounded in
the report and, if there is one, the letter of suggestions;
to oversee the effectiveness of the external audit process;
to perform the additional tasks assigned it by the Board of Directors, with particular
regard to the checks aimed at ensuring the transparency and the fairness of
transactions with related parties;
to report to the Board of Directors at least once every six months – when the
financial statements and the half-year report are approved – on the work performed
and the adequacy of the internal control system.
During 2006, the Internal Control Committee consisted entirely of non-executive,

independent Directors. Specifically, (i) during the period from January to December the
members were Piero Gnudi (who acted as coordinator), Augusto Fantozzi, Alessandro
Luciano, and Francesco Valsecchi, while (ii) beginning in December (that is to say, in
concurrence with the acknowledgment of the Chairman of the Board of Directors in his
new role as executive Director according to the criteria established by the Self-
regulation Code), the Committee has consisted of Augusto Fantozzi (who acts as
coordinator), Alessandro Luciano, and Francesco Valsecchi. In December 2006, the
Board of Directors also acknowledged that the new coordinator, Augusto Fantozzi, has
the qualifications of adequate experience in accounting and finance provided for by the
Self-regulation Code.
During 2006, the Internal Control Committee held 8 meetings, which were regularly
attended by its members (as well as the Chairman of the Board of Statutory Auditors)
and lasted an average of 1 hour and 30 minutes each.
During 2006, the work of the Internal Control Committee focused on the evaluation of
(i) the work plans prepared by both the head of internal auditing and the external
auditor, as well as (ii) the results of the audits performed during the preceding year,
and (iii) the content of the letter of suggestions prepared by the external auditor
regarding the accounting period in question. The Committee also examined several
supplementary auditing assignments for the external auditor regarding the Group,
supervised the preparation of the sustainability report and the “zero tolerance of
corruption – ZTC” plan, monitored the observance of the compliance program adopted
pursuant to legislative decree n. 231 of June 8, 2001 (and also seeing to the updating
of the aforesaid program), and oversaw the progress made in the activities aimed at
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ensuring the prompt issue of the management’s attestation regarding the planning,
implementation, and actual functioning of the internal controls over financial reporting,
in accordance with the requirements of the Sarbanes-Oxley Act (which applies to Enel
because of the listing of the Company’s shares on the New York Stock Exchange, in
the form of ADRs – American Depositary Receipts).
Board of Statutory Auditors

According to the provisions of the law and the Company’s bylaws, the Board of
Statutory Auditors consists of three regular Auditors and two alternates, who are
appointed for a period of three accounting periods and may be re-appointed when their
term expires.
During 2005, in adjusting its governance rules to the regulations of the United States
on audit committees contained in the Sarbanes-Oxley Act – which applies to Enel for
the aforesaid reason – the Company strengthened the supervisory duties already
entrusted to the Board of Statutory Auditors by Italian law, the description of which is
contained in the paragraph of the present report concerning the organization of the
Company.
Since July 2005, therefore, in connection with the provisions of the US regulations on
audit committees, the Board of Statutory Auditors has had the following duties: (i) to
supervise the work of the external auditor and to approve beforehand the entrusting of
the latter with additional assignments, which will in any case regard accounting; (ii) to
oversee the corporate procedures that regulate the presentation of complaints and
reports concerning accounting practices and the internal control system, with the
possibility of availing itself of external consultants.
In order to ensure that the Board of Statutory Auditors can effectively perform its duties
and in compliance with the recommendations of the Self-regulation Code, in December
2006 the Board of Directors expressly granted it, as far as it is concerned:
the power to oversee the independence of the external auditor (in confirmation of
the provisions of the US regulations on audit committees), monitoring both
compliance with the relevant regulatory provisions and the nature and extent of the
services other than auditing that the external auditor and the firms belonging to the
latter’s network may provide for the Company and the Group;
the power – which may also be exercised individually by the Auditors – to request
the Company’s Internal Auditing Department to perform checks on specific
corporate operating areas or transactions;
the power to promptly exchange with the Internal Control Committee information
relevant for performing their respective duties.
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All the members of the Board of Statutory Auditors must possess the requisites of
honorableness and professional competence required of statutory auditors of listed
companies by the legislation in force, as supplemented by special provisions of the by-
laws. According to the provisions of the Unified Financial Act, the limit to the number of
offices on the boards of directors and boards of statutory auditors that the members of
the Board of Statutory Auditors may hold in Italian corporations will be established by
the Consob in specially provided regulations, which are expected to be issued by the
end of March 2007. Until then, the need to ensure that the Statutory Auditors have the
time necessary to perform their duties diligently is satisfied by provision of the bylaws
according to which the members of the Board of Statutory Auditors may not hold the
office of regular statutory auditor in more than four companies not controlled by Enel
that issue securities listed on regulated markets.
As in its provisions for the Board of Directors – and in compliance with the regulations
regarding privatizations, as well as in accordance with the amendments to the Unified
Financial Act made at the end of 2005 – the bylaws provide that the appointment of the
entire Board of Statutory Auditors take place according to the “slate vote” mechanism,
which aims to ensure the presence on the Board of a regular Auditor and an alternate
Auditor designated by minority shareholders.
This electoral system currently provides that shareholders who, alone or together with
other shareholders, represent at least 1% of the share capital may present slates of
candidates. The slates must be filed at the Company’s registered office and published
in daily newspapers with nationwide circulation at least 10 days before the date of the
Shareholders’ Meeting. It should be noted in this regard that, beginning with the next
election of the Board of Statutory Auditors, the shareholders will be requested to file
their slates at least 15 days before the day of the Shareholders’ Meeting, in compliance
with the recommendations of the Self-regulation Code and according to specific note
contained in the notice of the meeting. In order to ensure a transparent procedure for
the appointment of the Board of Statutory Auditors, exhaustive information about the
personal and professional characteristics of the candidates must be filed at the
Company’s registered office at the same time as the slates, as well as promptly
published on the Company’s website according to a specific note contained in the
notice of the meeting. In accordance with the provisions of the Unified Financial Act,
the procedures for the election of a regular auditor by “slate vote” in companies with
listed shares are established by the Consob in specially provided regulations, which
are expected to be issued by the end of March 2007. Until then, the provisions of the
bylaws so far described will be valid.
In any case, the Statutory Auditors act autonomously and independently, including with
regard to the shareholders who elected them.
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Having been elected by the ordinary Shareholders’ Meeting of May 21, 2004, the
incumbent Board of Statutory Auditors has a term that will expire when the 2006
financial statements are approved. The Chairman of the Board of Statutory Auditors
elected by that Shareholders’ Meeting, Angelo Provasoli, resigned from his office in
March 2005 (but with effect as from the approval of the financial statements regarding
2004) because of his intense activity in consequence of his appointment as president
of the Bocconi University in Milan and thus the ordinary Shareholders’ Meeting of May
26, 2005 replaced him with Eugenio Pinto. The Board of Statutory Auditors therefore
currently consists of the following regular members, for each of whom a brief
professional profile is provided, as well as (where possible) the slate on which he was
designated:
Eugenio Pinto, 47, Chairman (designated by the Ministry of the Economy and
Finance).
A graduate with honors in economics and commerce (1983) of the University of Rome
“La Sapienza”, he is currently a professor of business economics in the economics
department of the LUISS “Guido Carli”. The author of numerous publications, he has
been a member of the group of experts on lending and saving set up by the Minister of
the Treasury, as well as of the expert committee instituted to advise the Treasury
Department with regard to bank foundations. He was also a member of the Zamagni
Committee (instituted by the Minister of Finance to draw up tax regulations for non-
profit organizations) and a consultant of the “Euro Committee” (established at the
Ministry of the Treasury and entrusted with drawing up the regulations that governed
the introduction of the European single currency in Italy). He is currently a member of
the executive committee of the “Organismo italiano di contabilità” (the Italian standard
setter on accounting principles), as well as of the expert committee of the CIRSFID at
the University of Bologna. A certified public accountant, he also consults on economic
and financial matters for important public and private clients. He is currently a regular
statutory auditor of, among others, Mediobanca, Alleanza Assicurazioni (Assicurazioni
Generali group), and Sofid (ENI group), as well as chairman of Astaldi’s board of
statutory auditors. He has been a regular statutory auditor at the Banca di Roma, the
Banca Nazionale dell’Agricoltura (Antonveneta group), and chairman of the board of
statutory auditors of Agip Petroli (ENI group). He has been Chairman of Enel’s Board of
Statutory Auditors since May 2005.
Carlo Conte, 59, regular Auditor (designated on the slate presented by the Ministry
of the Economy and Finance).
After graduating in economics and commerce at “La Sapienza” University in Rome, he
has remained active in the academic world. He has taught at the University of Chieti
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(1988-1989) and the LUISS “Guido Carli” in Rome (1989-1995) and currently teaches
governmental accounting at the Civil Service School and the School of Management at
the LUISS, as well as administration and governmental accounting at the Bocconi
University in Milan. A certified public accountant, he is also the author of a number of
publications. In 1967 he started his career in the Civil Service at the Government
Accounting Office, becoming a General Manager in 2002. He currently represents the
Office on a number of commissions and committees and in various research and work
groups, as well as representing Italy on several committees of OECD. He has also
been and still is a statutory auditor in a number of bodies, institutions, and companies.
He has been a member of Enel’s Board of Statutory Auditors since May 2004.
Franco Fontana, 63, regular Auditor (designated on the slate presented by

institutional investors).
A certified public accountant and professor of economics and business management,
since 1973 he has taught at a number of Italian universities and has been the dean of
the economics department at the LUISS “Guido Carli” since 1995. He has been director
of the school of management of the aforesaid university since 1994. He has served as
a member of several commissions for the reorganization of the Civil Service (Ministry of
the Postal Service and Telecommunications, Ministry of Finance, Ministry of Industry,
and Ministry of Health). From 1994 to 1997, he was chairman of the Cassa di
Risparmio of the Province of l’Aquila. A member of Enel’s Board of Statutory Auditors
since 2001, he is the author of numerous publications on the subjects of business
management and organization.
During 2006, the Board of Statutory Auditors held 16 meetings, lasting an average of 1
hour and 30 minutes, which were regularly attended by the regular Auditors and by the
magistrate representing the Court of Accounts.
In March 2007, the Board of Statutory Auditors certified that the Chairman, Eugenio
Pinto, and the regular Auditor Franco Fontana possess the requisite of independence
provided for by the Self-regulation Code with regard to directors. As far as the regular
Auditor Carlo Conte is concerned, the Board of Statutory Auditors ascertained that,
even though he does not possess the aforesaid requisite of independence (because he
is a General Manager at the Ministry of the Economy and Finance, the controlling
shareholder of the Company), he does possess the characteristics of independence
provided for by the Unified Financial Act (and the related implementation regulations)
with regard to statutory auditors of listed companies.
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Executive in charge of preparing the corporate accounting documents
In compliance with the provisions introduced at the end of 2005 in the Unified Financial
Act, a clause was inserted in the Company’s bylaws on the basis of which in June 2006
the Board of Directors, after receiving the opinion of the Board of Statutory Auditors,
appointed the head of the Company’s Accounting, Planning, and Control Department to
the position of executive in charge of preparing the corporate accounting documents.
The duty of this executive is to establish appropriate administrative and accounting
procedures for the preparation of the financial statements of the Parent Company and
the consolidated financial statements, as well as all other financial documents.
The Board of Directors ensures that this executive has adequate powers and means,
as well as seeing that the administrative and accounting procedures that he establishes
are actually observed.
The executive in question issues a declaration that accompanies the corporate
documents and communications released to the market regarding accounting
information, including interim information, and certifies that such information
corresponds to what is recorded in the Company’s documents, account books, and
book entries.
Together with the Chief Executive Officer, the aforesaid executive also certifies in a
specially provided report attached to the financial statements of the Parent Company,
the consolidated financial statements, and the half-year report (i) the adequacy and
actual application of the aforesaid administrative and accounting procedures during the
period to which such accounting documents refer and (ii) the correspondence of the
aforesaid documents to the accounting records and their suitability for providing a
truthful and fair representation of the Company’s and the Group’s balance sheet,
income statement, and cash flows. The content of the report in question will be
established by the Consob in specially provided regulations, which it is expected will be
issued by the end of March 2007.
Internal control system

With regard to internal control, several years ago the Group adopted a special system
aimed at (i) checking the adequacy of Group procedures with regard to effectiveness,
efficiency, and costs, (ii) ensuring the reliability and correctness of accounting records
as well as the safeguard of Company and Group assets, and (iii) ensuring that
operations comply with internal and external regulations, as well as with corporate
directives and guidelines for sound and efficient management.
The Group’s internal control system is divided into two distinct areas of activity:
“line auditing”, which consists of all the auditing activities that the individual
operating units or Group companies carry out on their own processes. Such
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auditing activities are primarily the responsibility of operating executives and are
considered an integral part of every corporate process;
internal auditing, which is entrusted to the Company’s related department and is
aimed essentially at the identification and containment of corporate risk of any kind.
This objective is pursued through the monitoring of line auditing, in terms of both
the adequacy of the audits themselves and the results actually achieved by their
application. This auditing activity is therefore applied to all corporate processes of
the Company and of Group companies. The personnel in charge of said activity is
responsible for indicating both the corrective actions deemed necessary and for
carrying out follow-up actions aimed at checking the results of the measures
suggested.
Responsibility for adopting an appropriate internal control system consistent with the
reference models and existing national and international best practice is entrusted to
the Board of Directors, which, to this end and availing itself of the Internal Control
Committee:
establishes the guidelines of such system, so that the main risks regarding the
Company and its subsidiaries are correctly identified, as well as properly measured,
managed, and monitored, and then ensures the compatibility of such risks with sound
and correct corporate management. It should be noted in this regard that in December
2006, the Board of Directors took note of the identification of the main risks regarding
the Group and the establishment of specially provided criteria for measuring,
managing, and monitoring the aforesaid risks – according to the content of a special
document drawn up by the Company’s Internal Auditing Department – and agreed on
the compatibility of the aforesaid risks with sound and correct corporate management;
appoints one or more executive Directors to supervise the functioning of the internal
control system. In this regard, it should be noted that in December 2006 the Board
of Directors entrusted this role to both the Chief Executive Officer and the
Chairman, assigning the latter the task of regularly participating in the meetings of
the Internal Control Committee;
evaluates at least once a year the adequacy, efficiency, and actual functioning of
the internal control system. It should be noted in this regard that in March 2007, the
Board of Directors expressed a positive evaluation in this respect;
appoints and removes one or more persons to be in charge of the internal control
system, establishing his compensation in line with the relevant corporate policies. In
this regard, in December 2006 the Board of Directors confirmed that the person in
charge of the internal control system is the head of the Company’s Internal Auditing
Department and established his compensation as the same as he was already
receiving.
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The executive Directors assigned to oversee the functioning of the internal control
system in turn:
oversee the identification of the main corporate risks, taking into account the
characteristics of the activities carried out by the Company and its subsidiaries and
then submitting them periodically to the Board of Directors for examination;
carry out the guidelines established by the Board of Directors, seeing to the
planning, implementation, and management of the internal control system and
constantly monitoring its overall adequacy, effectiveness, and efficiency. They also
supervise the adaptation of this system to the dynamics of operating conditions and
the legislative and regulatory framework;
make proposals to the Board of Directors regarding the appointment, removal and
compensation of one or more persons to be in charge of the internal control
system.
The person in charge of the internal control system:

is entrusted with ensuring that the internal control system is always adequate, fully
operative, and functioning;
is not the head of any operating area and is not hierarchically dependent on any
head of operating area;
has direct access to all the information that is useful for the performance of his
duties;
has adequate means at his disposal for performing the task assigned him;
reports on his activity to the executive Directors assigned to supervise the
functioning of the internal control system, the Internal Control Committee, and the
Board of Statutory Auditors. Specifically, he reports on the procedures through
which risk management is conducted, as well as on the observance of the plans
devised for their containment, and expresses his evaluation of the suitability of the
internal control system for achieving an acceptable level of overall risk.
Transactions with related parties

In December 2006, the Board of Directors – in compliance with the provisions of the
Italian Civil Code and the recommendations of the Self-regulation Code – adopted
regulations that establish the procedures for approving and carrying out transactions
undertaken by the Company or its subsidiaries with related parties, in order to ensure
the transparency and correctness, both substantial and procedural, of the aforesaid
transactions.
According to these regulations, the Internal Control Committee is entrusted with the
prior examination of the various kinds of transactions with related parties, with the
exception of those that present a low level of risk for the Company and the Group (the
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latter including the transactions carried out between companies entirely owned by Enel,
as well as those that are typical or usual, those that are regulated according to
standard conditions, and those whose consideration is established on the basis of
official market prices or rates established by public authorities).
After the Internal Control Committee has completed its examination, the Board of
Directors gives its prior approval (if the transactions regard the Company) or prior
evaluation (if the transactions regard Group companies) of the most significant
transactions with related parties, by which is meant (i) atypical or unusual transactions;
(ii) transactions with a value exceeding €25 million (with the exception of the previously
mentioned ones that present a low level of risk for the Company and the Group); and
(iii) other transactions that the Internal Control Committee thinks should be examined
by the Board.
Transactions whose value amounts to or is less than €25 million and in which the
relationship exists with a Director, a regular Auditor or an executive with strategic
responsibilities of the Company or the Group (or with a related party through such
persons) are always submitted to the Internal Control Committee for its prior
examination.
For each of the transactions with related parties submitted for its prior approval or
evaluation, the Board of Directors receives adequate information on all the significant
aspects and the related resolutions adequately explain the reasons for and the
advantageousness of the aforesaid transactions for the Company and the Group.
Furthermore, it is provided for the Board of Directors to receive detailed information on
the actual carrying out of the transactions that it has approved or evaluated.
In order to prevent a transaction with related parties is finalized on conditions that are
different from those that would probably have been negotiated between unrelated
parties, both the Internal Control Committee and the Board of Directors have the
authority to avail themselves – depending on the nature, value, or other characteristics
of the transaction – of the assistance of one or more independent experts of
recognized professional competence.
If the relationship exists with a Director or with a related party through the latter, the
Director involved must promptly inform the Board of Directors of the nature, terms,
origin, and extent of his interest and leave the Board meeting when the decision is
made, unless that prejudices the quorum or the Board of Directors decides otherwise.
If the relationship exists with the Chief Executive Officer or with a related party through
the latter, in addition to the foregoing he abstains from carrying out the transaction and
leaves the decision to the Board of Directors.
If the relationship exists with one of the regular Statutory Auditors or with a related
party through the latter, the Auditor concerned promptly informs the other Statutory
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Auditors and the Chairman of the Board of Directors of the nature, terms, origin, and
the extent of his interest.
Finally, a system of communications and certifications is provided for the purpose of
promptly identifying, as early as the negotiation phase, transactions with related parties
that involve Directors and regular Statutory Auditors, as well as executives with
strategic responsibilities, of the Company and the Group.
Processing of corporate information

As early as February 2000, the Board of Directors approved special rules (to which
additions were made in March 2006) for the management and processing of
confidential information, which also contain the procedures for the external circulation
of documents and information concerning the Company and the Group, with particular
reference to privileged information. The Company’s Directors and Statutory Auditors
are obliged to comply with the provisions contained in such rules and, in any case, to
maintain the confidentiality of the documents and information acquired in carrying out
their duties.
The rules are aimed at keeping confidential information secret, while at the same time
ensuring that the information regarding the Company and the Group made available to
the market is correct, complete, adequate, timely, and non-selective.
The rules entrust Enel’s Chief Executive Officer and the chief executive officers of the
Group companies with the general responsibility of managing the confidential
information concerning their respective spheres of competence, establishing that the
divulgation of information regarding individual subsidiaries must in any case be agreed
upon with the Parent Company’s Chief Executive Officer.
The rules also establish specific procedures to be followed in circulating information
regarding the Company and the Group outside the Group – with particular emphasis on
privileged information – and carefully regulate the ways in which Company and Group
representatives enter in contact with the press and other mass media (or financial
analysts and institutional investors).
Taking into account the provisions introduced in the USA by the Sarbanes-Oxley Act –
which apply to Enel for the reason explained above – in June 2003 the Board of
Directors also formalized the practices and procedures applied within the Group
regarding corporate information in a special document (called “Disclosure Controls and
Procedures”), with the aim of ensuring the transparency, timeliness, and completeness
of the documentation produced by Enel in the United States of America according to
the local laws applicable to listed companies.
Following the adoption by Italian law of the EU regulations regarding market abuse and
the coming into force of the secondary regulations issued by the Consob, in April 2006
the Company instituted (and began to regularly update) a Group register recording the
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persons, whether legal or natural, who have access to privileged information because of
the professional or other work they do or because of the tasks they perform on behalf of
the Company or Group companies. The purpose of this register is to make the persons
recorded therein aware of the value of the privileged information at their disposal, while
at the same time facilitating the Consob’s supervision of compliance with the regulations
provided to safeguard the integrity of markets.
Also following the adoption by Italian law of the EU regulations regarding market abuse
and the coming into force of the secondary regulations issued by the Consob, as from
April 2006 radical changes were introduced in the regulations regarding internal
dealing, that is the transparency of transactions involving the Company’s shares and
financial instruments connected with them carried out by the largest shareholders,
Company representatives, and persons closely connected with them.
The new EU regulations replaced those previously adopted by Borsa Italiana, which had
regulated the matter since January 2003. Therefore, as from April 2006 the Enel Group’s
Dealing Code – which the Board of Directors had adopted in December 2002 in
compliance with the regulations issued by Borsa Italiana – also became inapplicable. The
new regulations regarding internal dealing apply to the purchase, sale, subscription, and
exchange of Enel shares and of financial instruments connected with them by “important
persons”. This category includes shareholders who own at least 10% of the Company’s
share capital, the Directors, and the regular Statutory Auditors, as well as 16 managerial
positions currently identified within the Company on the basis of the relevant regulations,
because they have regular access to privileged information and are authorized to make
managerial decisions that could influence Enel’s evolution and prospects.
The obligations of transparency apply to all the aforesaid transactions whose total
value is at least €5,000 in a given year, even if carried out by persons closely
connected with the “important persons”.
In enacting measures to implement the aforesaid new regulations, the Board of
Directors considered it advisable to provide that “important persons” (other than the
shareholders who possess an interest amounting to or exceeding 10% of the
Company’s share capital) are obliged to abstain from carrying out transactions subject
to the regulations regarding internal dealing during two blocking periods, lasting
approximately one month each, around the time the Board of Directors’ approves the
Company’s proposed financial statements and the half-year report.
This initiative of the Board of Directors was prompted by will to improve the Company’s
governance standards with respect to the reference regulations, maintaining in force a
provision formerly contained in the Enel Group’s Dealing Code and aimed at preventing
the carrying out of transactions by “important persons” that the market could perceive
as suspect, because they are carried out during periods of the year that are especially
sensitive for corporate information.
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Relations with institutional investors and shareholders in general
Ever since the listing of its shares on the stock market, the Company has deemed it
appropriate for its own specific interest – as well as its duty with respect to the market –
to establish an ongoing dialogue, based on mutual understanding of their respective
roles, with its shareholders in general, as well as with institutional investors. Such
dialogue, in any case, was to take place in accordance with the rules and procedures
that regulate the divulgation of privileged information.
In this regard, in consideration of the size of the Group, it was deemed that such
dialogue could be facilitated by the creation of dedicated corporate units.
The Company therefore created (i) an investor-relations unit, which is currently a part
of its Finance Department, and (ii) a unit within its Corporate Affairs Department in
charge of communicating with shareholders in general.
It was also decided to further facilitate communication with investors through the creation
of a special section of the Company’s website (www.enel.it, investor relations section),
providing both financial information (financial statements, half-year and quarterly reports,
presentations to the financial community, analysts’ estimates, and information on trading
of the securities issued by the Company) and up-to-date data and documents of interest
to shareholders in general (press releases, the members of Enel’s Boards, the
Company’s bylaws and shareholders’-meeting regulations, information and documents
regarding Shareholders’ Meetings, documents regarding corporate governance, the code
of ethics, and the compliance program pursuant to legislative decree n. 231/2001, as well
as a general chart of the organization of the Group).
Shareholders’ Meetings
The suggestion contained in the Self-regulation Code to consider shareholders’ meetings
important occasions for discussion between a company’s shareholders and its board of
directors (even considering the availability of a number of different communication
channels between listed companies and shareholders, institutional investors, and the
market) was carefully evaluated and fully accepted by the Company, which – in addition
to ensuring the regular attendance of its Directors at Shareholders’ Meetings – deemed it
advisable to adopt specific measures to adequately enhance the latter.
In effect, in line with the recommendations of the special legislation regarding listed
companies, a specific provision was inserted in Enel’s bylaws aimed at facilitating the
collection of vote proxies from shareholders who are Group employees, thus favoring
their involvement in the decision-making processes of Shareholders’ Meetings.
With regard to the rules that govern the right to attend Shareholders’ Meetings, in
compliance with the reference regulations, the bylaws assign such right to those who
deposit their shares at least two days before the date set for a given Meeting and do
not withdraw them before the Meeting takes place. This rule was intended to satisfy the
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Company’s interest in knowing in advance the identity and number of the shareholders
entitled to attend the Shareholders’ Meeting – inter alia, for the purpose of seeing in a
timely manner if a quorum can be reached – without at the same time prejudicing the
possibility for the latter to sell the shares already deposited, if they so wish (in this
case, however, losing the right to attend the Shareholders’ Meeting, according to the
relevant regulations in force).
Furthermore, in September 1999, and thus with the listing of its shares imminent, the
Company adopted special regulations to ensure the orderly and efficient conduct of
Shareholders’ Meetings through the detailed regulation of their different phases, while
respecting the fundamental right of each shareholder to request clarification of the
different matters under discussion, to express his or her opinion, and to make
proposals.
Even though they do not constitute provisions of the bylaws, these regulations must be
approved at an Ordinary Shareholders’ Meeting, as specifically stated in the bylaws.
During 2001 their content was updated in order to ensure that they correspond to the
most advanced models for listed companies expressly drawn up by several
professional associations (Assonime and ABI).
In the event of a significant change in the market capitalization of the Company or the
composition of the shareholders, the Board of Directors evaluates the advisability of
proposing to a Shareholders’ Meeting bylaws amendments with regard to the minimum
percentage required for exercising actions and rights provided for as a protection of
minority shareholders.
Code of Ethics
Awareness of the social and environmental effects that accompany the activities
carried out by the Group, as well as consideration of the importance of both a
cooperative approach with stakeholders and the good name of the Group itself (in both
internal and external relations), inspired the preparation of the Enel Group’s Code of
Ethics, which was approved by the Company’s Board of Directors in March 2002 and
updated in March 2004.
This code expresses the commitments and ethical responsibilities involved in the
conduct of business, regulating and harmonizing corporate behavior according to
standards requiring maximum transparency and fairness with respect to all
stakeholders. Specifically, the Code of Ethics consists of:
general principles regarding relations with stakeholders, which abstractly define the
reference values guiding the Group in the carrying out of its activities. Among the
aforesaid principles, specific mention should be made of the following: honesty,
impartiality, confidentiality, shareholder value, the value of human resources, the
242
transparency and completeness of information, service quality, and the protection
of the environment;
criteria of behavior towards each class of stakeholders, which specify the guidelines
and rules that Enel’s officers and employees must follow in order to ensure
observance of the general principles and prevent the risk of unethical behavior;
implementation mechanisms, which describe the control system devised to ensure
observance of the code of ethics and its continual improvement.
Taking into account the obligations under the Sarbanes-Oxley Act of companies with
shares listed in the United States of America, in June 2004 the Board of Directors also
approved an additional specific code of ethical principles regarding financial matters,
which applies specifically to the Company’s Chief Executive Officer and to the heads of
the Finance Department and the Accounting, Planning, and Control Department.
In accordance with the requirements of US law, the code concerned consists of a
series of rules aimed at reasonably preventing illegal behavior, as well as promoting:
honest and transparent financial management, which gives due consideration to
any conflicts of interests;
fair, comprehensible, complete, exact, and prompt information in the documents
sent to the authorities supervising financial markets and in all other public notices;
compliance with government rules and regulations;
the establishment of internal procedures aimed at ensuring that any violations of
the provisions of the code are promptly communicated to the persons designated
therein;
adequate public transparency regarding observance of the provisions of the code.
Compliance Program
In July 2002 the Company launched a compliance program corresponding to the
requirements of legislative decree no. 231 of June 8, 2001, which introduced into the
Italian legal system a regime of administrative (but in fact criminal) liability with respect
to companies for several kinds of crimes committed by their directors, executives, or
employees in the interest or to the benefit of the companies themselves.
The content of the aforesaid program is consistent with the provisions of the guidelines
on the subject established by industry associations and with the best practice in the
United States and represents another step towards strictness, transparency and a
sense of responsibility in internal relations and those with the external world. At the
same time, it offers shareholders adequate insurance of efficient and fair management.
The program in question consists of a “general part” (in which are described, among
other things, the content of legislative decree no. 231/2001, the objectives of the
program and how it works, the duties of the internal control body responsible for
243
supervising the functioning and observance of the program, the information flows, and
the penalty regime) and separate “special parts” concerning the different kinds of
crimes provided for by legislative decree no. 231/2001.
In 2006, as proposed by the Internal Control Committee, the Board of Directors
updated and supplemented the compliance program by (i) revising the “general part”
and the “special parts” regarding corporate crimes and crimes against the civil service,
in order to take into account court rulings and the applicative experience acquired
during the first years of implementation of the program, as well as (ii) approving new
special parts concerning crimes of terrorism and subversion of the democratic order,
crimes against the person, and crimes and administrative wrongdoing regarding market
abuse.
“Zero tolerance of corruption” plan

In June 2006, the Board of Directors approved the adoption of the “zero tolerance of
corruption – ZTC” plan in order to give substance to Enel’s adherence to the Global
Compact (an action program promoted by the UN in 2000) and the PACI – Partnership
Against Corruption Initiative (sponsored by the World Economic Forum in Davos in
2005).
The ZTC plan neither replaces nor overlaps with the code of ethics and the compliance
program adopted pursuant to legislative decree no. 231/2001, but represents a more
radical step regarding the subject of corruption and adopts a series of
recommendations for implementing the principles formulated on the subject by
Transparency International.
*****
Attached below are three tables that summarize some of the most significant
information contained in the second section of the report.
244
TABLE 1: Structure of Enel’s Board of Directors and Committees
Nomination Executive
Board of Directors Internal Control Compensation Committee Committee
Committee Committee (if any) (if any)
Number of
Office Members executive non-executive independent **** other offices ** *** **** *** **** *** **** *** ****
(1)
Chairman Gnudi Piero X X X 100% 1 X 100%
Chief Executive Conti Fulvio X 100% 1
Officer/General
Manager
Director Ballio Giulio (*) X X 94% - X 80%
Director Fantozzi Augusto (*) X X 100% 1 X 63% Non-
Non-existent
existent
Director Luciano Alessandro X X 100% - X 100%
Director Napolitano Fernando X X 100% 1 X 100%
Director Taranto Francesco (*) X X 100% 6 X 100%
Director Tosi Gianfranco X X 100% - X 100%
Director Valsecchi Francesco X X 100% 1 X 100%
Quorum required for the presentation of slates for the appointment of the Board of Directors:1% of the share capital.
Number of meetings held in 2006: Board of Directors: 16 - Internal Control Committee: 8 - Compensation Committee: 10 - Nomination Committee: N.A. - Executive Committee: N.A.
NOTES
(1) The Chairman of the Board of Directors, Piero Gnudi, was a non-executive, independent Director in the period between January and December 2006 (according to the criteria specified in the 2002 edition of the Self-regulation
Code) and subsequently has been an executive Director since December 2006 (according to the criteria specified in the 2006 edition of the Self-regulation Code).
* The presence of an asterisk indicates that the Director was designated on a slate presented by minority shareholders.
** This column shows the number of offices held by the person concerned on the board of directors or the board of statutory auditors of other companies of significant size, as defined by the policy established in this regard by
the Board of Directors.
*** In these columns, an “X” indicates the Committee(s) of which each Director is a member. It should be noted that, since December 2006, in consideration of his new role as an executive Director, the Chairman of the Board of
Directors, Piero Gnudi, has no longer been a member of the Internal Control Committee.
**** These columns show the percentages of the meetings of, respectively, the Board of Directors and the Committees attended by each Director. All absences were appropriately explained.
245
TABLE 2: Enel’s Board of Statutory Auditors
Percentage of Board
Office Members meetings attended Number of other offices**
Chairman Pinto Eugenio 100% 3

Regular Auditor Conte Carlo 100% -
Regular Auditor Fontana Franco (*) 94% -
Alternate Auditor Giordano Giancarlo N.A. -
Alternate Auditor Sbordoni Paolo (*) N.A. -
Number of meetings held in 2006: 16
Quorum required for the presentation of slates for the appointment of the Board of Statutory Auditors: 1% of the share capital.
NOTES
* The presence of an asterisk indicates that the Statutory Auditor was designated on a slate presented by minority shareholders.
** This column shows the number of offices held by the person concerned on the boards of directors or boards of statutory auditors of
other companies listed on regulated Italian markets.
246
TABLE 3: Other provisions of the Self-regulation Code
Summary of the reasons for any deviation from the
YES NO recommendations of the Code
Delegation system and transactions with related parties
Has the board of directors delegated powers and established: X
a) their limits X
b) how they are to be exercised X
c) how often it is to be informed? X
Has the board of directors reserved the power to examine and

approve beforehand transactions having a significant impact on the X
company’s strategy, balance sheet, income statement, or cash-flow
(including transactions with related parties)?
Has the board of directors established the guidelines and criteria for X
identifying “significant” transactions?
Are the aforesaid guidelines and criteria described in the report? X
Has the board of directors established special procedures for the X

examination and approval of transactions with related parties?
Are the procedures for approving transactions with related parties X

described in the report?
Procedures of the most recent election of the board of directors and the board of statutory auditors
Were the candidacies for the office of director filed at least 10 days (*)
beforehand? X
Were the candidacies for the office of director accompanied by X

exhaustive information?
Were the candidacies for the office of director accompanied by

statements as to whether or not they qualified as independent? X
Were the candidacies for the office of statutory auditor filed at least X This procedure was duly observed the last time the entire
10 days (*) beforehand? board of statutory auditors was elected (in the year 2004),
when the “slate-vote” mechanism was applied.
When the chairman of the board of statutory auditors was
replaced (during 2005), instead, the candidacies were not
filed beforehand, because the election did not take place by
“slate vote”.
Were the candidacies for the office of statutory auditor accompanied X

by exhaustive information?
Shareholders’ meetings
Has the company approved rules for shareholders’ meetings? X
Are the rules attached to the report or is it stated where they can be X
obtained/downloaded?
Internal control
Has the company appointed the person in charge of internal control? X
Is the person in charge hierarchically independent of heads of X

operating areas?
Organizational position of the person in charge of internal control Head of the Internal Auditing Department
Investor relations
Has the company appointed a head of investor relations? X
Organizational unit of the head of investor relations and related Relations with institutional investors:
contact information Investor Relations – Viale Regina Margherita, 137 – 00198 Rome, Italy – tel.
++39.06.83053437 – fax ++39.06.83053771 – e-mail:
investor.relations@enel.it
Relations with retail shareholders:

Department of Corporate Affairs – Viale Regina Margherita, 137 – 00198
Rome, Italy – tel. ++39.06.83052081 – fax ++39.06.83052129 – e-mail:
azionisti.retail@enel.it
(*) It should be noted that in the 2006 edition of the Self-regulation Code the recommended deadline for filing the slates of candidates for the offices
of director and statutory auditor was increased from 10 to 15 days.
247
Subsidiaries, associates and other significant equity
investments of the Enel Group at December 31, 2006
In compliance with Consob Notice no. DEM/6064293 of July 28, 2006 and Article 126
of Consob Resolution no. 11971 of May 14, 1999, a list of subsidiaries and associates
of Enel SpA at December 31, 2006, pursuant to Article 2359 of the Italian Civil Code,
and of other significant equity investments is provided below. Enel has full title to all
investments.
The following information is included for each company: name, registered office,
activity, share capital, currency of account, Group companies that have a stake in the
company and their respective ownership share, and the Group’s ownership share.
248
Subsidiaries consolidated on a line-by-line basis at December 31, 2006 (1)
Registered Group %
Company name office Country Activity Share capital Currency Held by % holding holding
at Dec. 31, 2006
Parent company:
Enel SpA Rome Italy Holding company 6,176,196,279 Euro - - -
Subsidiaries:
Aiten AS Trnava Slovakia IT services 6,000,000 SKK Slovenské elektrárne AS 66.00% 43.56%
Avisio Energia SpA Trento Italy Gas distribution 6,500,000 Euro Enel Rete Gas SpA 100.00% 99.83%
Barras Electricas Lugo Spain Electricity distribution 15,689,796.62 Euro Electra de Viesgo 54.95% 54.95%
Galaico Asturianas SA Distribucion SL
Barras Electricas Lugo Spain Electricity generation 1,374,136.05 Euro Barras Electricas Galaico 100.00% 54.95%
Generación SL Asturianas SA
Cise Srl Rome Italy Real estate management 318,291,049 Euro Enel Servizi Srl 100.00% 100.00%
Co.Im Gas SpA Santa Maria Italy Management of gas 1,479,000 Euro Enel Rete Gas SpA 80.00% 79.86%
a Colle distribution and sales
(Lucca) plants
Concert Srl Rome Italy Product, plant and 10,000 Euro Enel Produzione SpA 51.00% 51.00%
equipment certification
Dalmazia Trieste Srl Rome Italy Real estate management 5,585,698 Euro Cise Srl 69.91%
100.00%
Enel Servizi Srl 30.09%
Decom Slovakia, spol. Trnava Slovakia Electrical engineering 5,200,000 SKK Slovenské elektrárne AS 67.31% 44.42%
sro
Deval SpA Aosta Italy Distribution and sale of 37,500,000 Euro Enel SpA 51.00% 51.00%
electricity in Valle D’Aosta
Deval Energie Srl Aosta Italy Electricity sales 200,000 Euro Deval SpA 100.00% 51.00%
Electra de Viesgo Santander Spain Distribution and sale of 77,792,000 Euro Enel Distribuzione SpA 100.00% 100.00%
Distribución SL electricity
Enel Capital Srl Rome Italy Holding company 8,500,000 Euro Enel SpA 100.00% 100.00%
Enel Comercializadora Santander Spain Gas and electricity sales 61,000 Euro Enel Trade SpA 100.00% 100.00%
de Gas SA
Enel Distribuzione SpA Rome Italy Electricity distribution 2,600,000,000 Euro Enel SpA 100.00% 100.00%
Enel Electrica Banat SA Timisoara Romania Electricity distribution 463,474,090 RON Enel Distribuzione SpA 51.00% 51.00%
Enel Electrica Dobrogea Costanza Romania Electricity distribution 338,970,050 RON Enel Distribuzione SpA 51.00% 51.00%
SA
Enel Energia SpA Rome Italy Gas and electricity sales 302,039 Euro Enel SpA 100.00% 100.00%
(formerly Enel Gas SpA)
Enel Energy Europe Srl Rome Italy Holding company 10,000 Euro Enel SpA 100.00% 100.00%
Enel ESN Energo LLC Moscow Russian Management and 1,000,000 Ruble Enel ESN Management BV 100.00% 75.00%
Federation maintenance of power
plants
Enel ESN Management Amsterdam Netherlands Holding company 18,000 Euro Enel Produzione SpA 75.00% 75.00%
BV
Enel Finance Luxembourg Luxembourg Finance 1,391,900,230 Euro Enel SpA 100.00% 100.00%
International SA
Enel Green Power Luxembourg Luxembourg Holding company for 156,650,000 Euro Enel Produzione SpA 67.11%
International SA companies operating in
electricity generation from 100.00%
renewable resources
Enel Investment Holding BV 32.89%
Enel Investment Holding BV Amsterdam Netherlands Holding company 1,593,050,000 Euro Enel SpA 100.00% 100.00%
Enel Ireland Finance Ltd Dublin Ireland Finance 1,000,000 Euro Enel Finance International 100.00% 100.00%
SA
Registered Group %
at Dec. 31, 2006
Enel Latin America LLC (1) Wilmington USA Electricity generation from - Enel Green Power 100.00% 100.00%
(Delaware) renewable resources International SA
Enel M@p Srl Rome Italy Metering, remote control 100,000 Euro Enel Distribuzione SpA 100.00% 100.00%
and communication
services managed on the
electricity network
Enel Maritza East 3 AD Sofia Bulgaria Electricity generation 265,943,600 Leva Maritza East III Power 73.00% 73.00%
(formerly Maritza East III Holding BV
Power Company AD)
Enel North America Inc. (1) Wilmington USA Electricity generation from 14.25 USD Enel Green Power 100.00% 100.00%
(Delaware) renewable resources International SA
Enel Operations Galabovo Bulgaria Management and 50,000 Leva Maritza O&M Holding 73.00% 73.00%
Bulgaria AD (formerly maintenance of power Netherlands BV
Maritza East 3 plants
Operating Company AD)
Enel Panama Ltd Tortola British Holding company 40,555,726 USD Enel Investment Holding BV 100.00% 100.00%
(formerly HQI Latin Virgin
America Ltd) Island
Enel Produzione SpA Rome Italy Electricity generation 2,400,000,000 Euro Enel SpA 100.00% 100.00%
Enel Rete Gas SpA Milan Italy Gas distribution 54,139,160 Euro Enel Distribuzione SpA 99.83% 99.83%
Enel Service UK Ltd London United Energy services 100 GBP Enel Trade SpA 100.00% 100.00%
Kingdom
Enel Servicii Srl Bucharest Romania Business services 200,000 RON Enel SpA 80.00%
100.00%
Enel Distribuzione SpA 20.00%
Enel Servizi Srl Rome Italy Personnel administration 50,000,000 Euro Enel SpA 100.00% 100.00%
activities, information
technology and business
services
Enel Sole Srl Rome Italy Public lighting systems 4,600,000 Euro Enel SpA 100.00% 100.00%
Enel Trade SpA Rome Italy Fuel trading and logistics - 90,885,000 Euro Enel SpA 100.00% 100.00%
Electricity sales
Enel Viesgo Energia SL Santander Spain Electricity and gas sales 1,000,000 Euro Electra de Viesgo 100.00% 100.00%
Distribucion SL
Enel Viesgo Generación Santander Spain Electricity generation and 425,311,006 Euro Enel Produzione SpA 100.00% 100.00%
SL sales
Enel Viesgo Servicios Santander Spain Business services 3,010 Euro Enel SpA 60.00%
SL
100.00%
Enel Produzione SpA 20.00%
Enel Distribuzione SpA 20.00%
Enel.Factor SpA Rome Italy Factoring 12,500,000 Euro Enel SpA 100.00% 100.00%
Enel.NewHydro Srl Rome Italy Engineering, water 1,000,000 Euro Enel SpA 100.00% 100.00%
systems
Enel.Re Ltd Dublin Ireland Reinsurance 3,000,000 Euro Enel Investment Holding 100.00% 100.00%
BV
Enel.si - Servizi integrati Rome Italy Plant engineering and 5,000,000 Euro Enel SpA 100.00% 100.00%
Srl energy related services
Enelco SA Athens Greece Plant construction, 587,000 Euro Enel Investment Holding BV 75.00% 75.00%
operation and
maintenance
Enelpower SpA Milan Italy Engineering and 2,000,000 Euro Enel SpA 100.00% 100.00%
construction
Enelpower Contractor Riyadh Saudi Plant construction, 5,000,000 SR Enelpower SpA 51.00% 51.00%
and Development Saudi Arabia operation and
Arabia Ltd maintenance
Enelpower do Brasil Rio de Brazil Electrical engineering 1,242,000 R$ Enelpower SpA 99.99% 99.99%
Ltda Janeiro
Enelpower UK Ltd London United Electrical engineering 1,000 GBP Enelpower SpA 100.00% 100.00%
Kingdom
250
Registered Group %
at Dec. 31, 2006
Energoslužby AS Trnava Slovakia Business services 261,000,000 SKK Slovenské elektrárne AS 100.00% 66.00%
Erelis Sas Lyon France Electricity generation 44,502.16 Euro Enel Investment Holding BV 100.00% 100.00%
from renewable
resources
Geotermica Managua Nicaragua Electricity generation 50,000 NIO Enel Produzione SpA 60.00% 60.00%
Nicaraguense SA from renewable
resources
Hydrogen Park - Venice Italy Promotion of studies 215,000 Euro Enel Produzione SpA 53.49% 53.49%
Marghera per l’idrogeno and projects for the
Scrl use of hydrogen
Maritza East III Power Amsterdam Netherlands Holding company 100,000,000 Euro Enel Produzione SpA 100.00% 100.00%
Holding BV
Maritza O&M Holding Amsterdam Netherlands Holding company 40,000 Euro Enel Produzione SpA 100.00% 100.00%
Netherlands BV
Metansicula SpA Milan Italy Gas distribution 1,033,000 Euro Enel Rete Gas SpA 100.00% 99.83%
Metansicula Vendita Srl Milan Italy Gas sales 100,000 Euro Enel Energia SpA 100.00% 100.00%
(formerly Enel Gas SpA)
Ochrana a bezpečnosť Mochovce Slovakia Security services 1,000,000 SKK Slovenské elektrárne AS 100.00% 66.00%
SE AS
Pragma Energy SA Lugano Switzerland Coal trading 4,000,000 CHF Enel Investment Holding BV 100.00% 100.00%
Reti Gas Scrl Milan Italy Construction of gas 11,000 Euro Enel Rete Gas SpA 95.00% 94.84%
distribution networks
Sfera - Società per la Rome Italy Human resources and 2,000,000 Euro Enel SpA 100.00% 100.00%
formazione e le risorse training
aziendali Srl
Slovenské elektrárne AS Bratislava Slovakia Electricity generation 38,238,803,000 SKK Enel Produzione SpA 66.00% 66.00%
Slovenské elektrárne Rotterdam Netherlands Finance 18,200 Euro Slovenské elektrárne AS 100.00% 66.00%
Finance BV
Société Armoricaine Pleyber France Electricity generation 1,000 Euro Erelis Sas 100.00% 100.00%
d'Energie Eolienne Sarl Christ from renewable
resources
Société du Chemin de la Meyzieu France Electricity generation 1,000 Euro Erelis Sas 100.00% 100.00%
Ligue Snc from renewable
resources
Société du Parc Eolien Meyzieu France Electricity generation 1,000 Euro Erelis Sas 100.00% 100.00%
Grandes Terres Est Eurl from renewable
resources
Société du Parc Eolien Meyzieu France Electricity generation 1,000 Euro Erelis Sas 100.00% 100.00%
Grandes Terres Ouest from renewable
Eurl resources
Vyzkont sro Trnava Slovakia Radioactive waste 200,000 SKK Slovenské elektrárne AS 51.00% 33.66%
storage
Water & Industrial Monza Italy Sewage treatment 15,615,000 Euro Enel.NewHydro Srl 51.00% 51.00%
Services Company SpA
(1) The companies held by Enel North America Inc. and Enel Latin America LLC and fully consolidated on a line-by-line basis are listed separately.
251
Subsidiaries held by Enel North America Inc. consolidated on a line-by-line basis at
December 31, 2006 (1)
Group %
Company name Registered office Country Share capital (2) Currency Held by (3) % holding holding
at Dec. 31, 2006
Parent company:
Enel North America Inc. Wilmington USA 14.25 USD Enel Green Power International 100.00% 100.00%
(Delaware) SA
Subsidiaries:
Agassiz Beach LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Aquenergy Systems Inc. Greenville USA 10,500 USD Consolidated Hydro Southeast 100.00% 100.00%
(South Carolina) Inc.
Asotin Hydro Company Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Autumn Hills LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Aziscohos Hydro Company Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Barnet Hydro Company Burlington USA - Sweetwater Hydroelectric Inc. 100.00% 100.00%
(Vermont)
Beaver Falls Water Power Philadelphia USA - Beaver Valley Holdings Ltd. 67.50% 67.50%
Company (Pennsylvania)
Beaver Valley Holdings Ltd. Philadelphia USA 2 USD Hydro Development Group Inc. 100.00% 100.00%
(Pennsylvania)
Beaver Valley Power Philadelphia USA 30 USD Hydro Development Group Inc. 100.00% 100.00%
Company (Pennsylvania)
Black River Hydro Assoc. New York USA - (Cataldo) Hydro Power 75.00% 75.00%
(New York) Associates
Boott Field LLC Wilmington USA - Boott Hydropower Inc. 100.00% 100.00%
(Delaware)
Boott Hydropower Inc. Boston USA - Boott Sheldon Holdings LLC 100.00% 100.00%
(Massachusetts)
Boott Sheldon Holdings LLC Wilmington USA - Hydro Finance Holding 100.00% 100.00%
(Delaware) Company Inc.
BP Hydro Associates Boise (Idaho) USA - Chi Idaho Inc. 68.00%
100.00%
Chi Magic Valley Inc. 32.00%
BP Hydro Finance Partnership Salt Lake City (Utah) USA - BP Hydro Associates 75.92%
100.00%
Fulcrum Inc. 24.08%
Bypass Limited Boise (Idaho) USA - El Dorado Hydro 100.00% 100.00%
Bypass Power Company Los Angeles USA - Chi West Inc. 100.00% 100.00%
(California)
Canastota Wind Power LLC Wilmington USA - Essex Company 100.00% 100.00%
(Delaware)
(Cataldo) Hydro Power New York USA - Hydro Development Group Inc. 50.00%
Associates (New York) 100.00%
Chi Black River Inc. 50.00%
Chi Acquisitions Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Chi Acquisitions II Inc. Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
(Delaware)
Chi Black River Inc. Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
(Delaware)
Chi Canada Inc. Montreal (Quebec) Canada 100 CAD Chi Finance LLC 100.00% 100.00%
Chi Dexter Inc. Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
(Delaware)
Chi Finance LLC Wilmington USA - Enel North America Inc. 100.00% 100.00%
(Delaware)
Chi Highfalls Inc. Wilmington USA - Chi Finance LLC 100.00% 100.00%
(Delaware)
252
Group %
at Dec. 31, 2006
Chi Hydroelectric Company Inc. St. John Canada 100 CAD Chi Canada Inc. 100.00% 100.00%
(Newfoundland)
Chi Idaho Inc. Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
(Delaware)
Chi Magic Valley Inc. Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
(Delaware)
Chi Minnesota Wind LLC Wilmington USA - Chi Finance LLC 100.00% 100.00%
(Delaware)
Chi Mountain States Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
Operations Inc. (Delaware)
Chi Operations Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Chi Power Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Chi Power Marketing Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Chi S. F. LP Montreal (Quebec) Canada -- Chi Hydroelectric Company Inc. 100.00% 100.00%
Chi Universal Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Chi West Inc. Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
(Delaware)
Chi Western Operations Inc. Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
(Delaware)
Coneross Power Corporation Greenville USA 110,000 USD Aquenergy Systems Inc. 100.00% 100.00%
Inc. (South Carolina)
Consolidated Hydro Mountain Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
States Inc. (Delaware)
Consolidated Hydro New Wilmington USA 130 USD Chi Universal Inc. 100.00% 100.00%
Hampshire Inc. (Delaware)
Consolidated Hydro New York Wilmington USA 200 USD Enel North America Inc. 100.00% 100.00%
Inc. (Delaware)
Consolidated Hydro Wilmington USA 100 USD Chi Acquisitions II Inc. 95.00%
Southeast Inc. (Delaware) 100.00%
Gauley River Power Partners LP 5.00%
Consolidated Pumped Wilmington USA 100 USD Enel North America Inc. 80.00% 80.00%
Storage Inc. (Delaware)
Copenhagen Associates New York USA - Hydro Development Group Inc. 50.00%
(New York) 99.00%
Chi Dexter Inc. 49.00%
Crosby Drive Investments Inc. Boston USA - Asotin Hydro Company Inc. 100.00% 100.00%
(Massachusetts)
El Dorado Hydro Los Angeles USA - Olympe Inc. 82.50%
(California) 100.00%
Motherlode Hydro Inc. 17.50%
Essex Company Boston USA - Enel North America Inc. 100.00% 100.00%
(Massachusetts)
Florence Hills LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Fulcrum Inc. Boise (Idaho) USA 1,002.50 USD Consolidated Hydro Mountain 100.00% 100.00%
States Inc.
Gauley Hydro LLC Wilmington USA - Essex Company 100.00% 100.00%
(Delaware)
Gauley River Management Burlington USA - Chi Finance LLC 100.00% 100.00%
Corporation (Vermont)
Gauley River Power Partners Burlington USA - Gauley River Management 1.00%
LP (Vermont) Corporation 100.00%
- Gauley Hydro LLC 99.00%
Gestion Cogeneration Inc. Montreal (Quebec) Canada 100 CAD Hydrodev Inc. 100.00% 100.00%
Hadley Ridge LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
253
Group %
at Dec. 31, 2006
Highfalls Hydro Company Inc. Wilmington USA - Chi Finance LLC 100.00% 100.00%
(Delaware)
Hope Creek LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Hosiery Mills Hydro Company Wilmington USA 100 USD Chi Acquisitions Inc. 100.00% 100.00%
Inc. (Delaware)
Hydrodev Inc. Montreal (Quebec) Canada 100 CAD Chi Canada Inc. 100.00% 100.00%
Hydro Development Group New York USA 12.25 USD Chi Acquisitions II Inc. 100.00% 100.00%
Inc. (New York)
Hydro Energies Corporation Burlington USA 5,000 USD Chi Finance LLC 100.00% 100.00%
(Vermont)
Hydro Finance Holding Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
Company Inc. (Delaware)
Jack River LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Jessica Mills LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Julia Hills LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Kings River Hydro Company Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
Inc. (Delaware)
Kinneytown Hydro Company Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
Inc. (Delaware)
LaChute Hydro Company Inc. Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
(Delaware)
Lawrence Hydroelectric Boston USA - Essex Company 92.50%
Associates LP (Massachusetts) 100.00%
Crosby Drive Investments Inc. 7.50%
Littleville Power Company Inc. Boston USA - Hydro Development Group Inc. 100.00% 100.00%
(Massachusetts)
Lower Saranac Corporation New York USA 2 USD Twin Saranac Holdings LLC 100.00% 100.00%
(New York)
Lower Saranac Hydro Wilmington USA - Lower Saranac Corporation 100.00% 100.00%
Partners (Delaware)
Mascoma Hydro Corporation Concord USA - Chi Acquisitions II Inc. 100.00% 100.00%
(New Hampshire)
Metro Wind LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Mill Shoals Hydro Company Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
Inc. (Delaware)
Minnewawa Hydro Company Wilmington USA 100 USD Enel North America Inc. 100.00% 100.00%
Inc. (Delaware)
Missisquoi Associates Los Angeles USA - Sheldon Vermont Hydro 1.00%
(California) Company Inc.
100.00%
Sheldon Springs Hydro 99.00%
Associates LP
Motherlode Hydro Inc. Los Angeles USA - Chi West Inc. 100.00% 100.00%
(California)
Newbury Hydro Company Burlington USA - Sweetwater Hydroelectric Inc. 100.00% 100.00%
(Vermont)
NeWind Group Inc. St. John Canada 100 CAD Chi Canada Inc. 100.00% 100.00%
(Newfoundland)
Northwest Hydro Inc. Wilmington USA 100 USD Chi West Inc. 100.00% 100.00%
(Delaware)
Notch Butte Hydro Company Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
Inc. (Delaware)
O&M Cogeneration Inc. Montreal (Quebec) Canada 15 CAD Hydrodev Inc. 66.66% 66.66%
Olympe Inc. Los Angeles USA - Chi West Inc. 100.00% 100.00%
(California)
Ottauquechee Hydro Wilmington USA 100 USD Chi Finance LLC 100.00% 100.00%
254
Group %
at Dec. 31, 2006
Pelzer Hydro Company Inc. Wilmington USA 100 USD Consolidated Hydro Southeast Inc. 100.00% 100.00%
(Delaware)
Pyrites Associates New York USA - Hydro Development Group Inc. 50.00%
(New York) 100.00%
Chi Dexter Inc. 50.00%
Rock Creek Limited Los Angeles USA - El Dorado Hydro 100.00% 100.00%
Partnership (California)
Ruthton Ridge LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
SE Hazelton A. LP Los Angeles USA - Bypass Limited 100.00% 100.00%
(California)
Sheldon Springs Hydro Wilmington USA - Sheldon Vermont Hydro 100.00% 100.00%
Associates LP (Delaware) Company Inc.
Sheldon Vermont Hydro Wilmington USA - Boott Sheldon Holdings LLC 100.00% 100.00%
Slate Creek Hydro Associates Los Angeles USA - Slate Creek Hydro Company Inc. 100.00% 100.00%
LP (California)
Slate Creek Hydro Company Wilmington USA 100 USD Chi Acquisitions II Inc. 100.00% 100.00%
Inc. (Delaware)
Snyder Wind Farm LLC Dallas (Texas) USA - Chi Power Inc. 100.00% 100.00%
Soliloquoy Ridge LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Somersworth Hydro Company Wilmington USA 100 USD Chi Universal Inc. 100.00% 100.00%
Inc. (Delaware)
Southwest Transmission LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Spartan Hills LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
St.-Felicien Cogeneration Montreal (Quebec) Canada - Gestion Cogeneration Inc. 50.00% 50.00%
Summit Energy Storage Inc. Wilmington USA 8,200 USD Enel North America Inc. 75.00% 75.00%
(Delaware)
Sun River LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Sweetwater Hydroelectric Inc. Concord USA 250 USD Chi Acquisitions II Inc. 100.00% 100.00%
(New Hampshire)
TKO Power Inc. Los Angeles USA - Chi West Inc. 100.00% 100.00%
(California)
Triton Power Company New York USA - Chi Highfalls Inc. 2.00%
(New York) 100.00%
Highfalls Hydro Company Inc. 98.00%
Tsar Nicholas LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Twin Falls Hydro Associates Seattle USA - Twin Falls Hydro Company Inc. 51.00% 51.00%
(Washington)
Twin Falls Hydro Company Wilmington USA 10 USD Twin Saranac Holdings LLC 100.00% 100.00%
Inc. (Delaware)
Twin Lake Hills LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
Twin Saranac Holdings LLC Wilmington USA - Enel North America Inc. 100.00% 100.00%
(Delaware)
Western New York Wind New York USA 300 USD Enel North America Inc. 100.00% 100.00%
Corporation (New York)
Willimantic Power Corporation Hartford USA - Chi Acquisitions Inc. 100.00% 100.00%
(Connecticut)
Winter’s Spawn LLC Minneapolis USA - Chi Minnesota Wind LLC 49.00% 49.00%
(Minnesota)
(1) All the companies are engaged in electricity generation from renewable resources.
(2) In many cases, the subsidiaries are formed as entities that do not require the payment of share capital.
(3) For companies in which the holding is less than 50% Enel North America Inc. holds preference shares that enable it to determine the financial and operational
policies of the company and therefore to exercise a dominant influence.
255
Subsidiaries held by Enel Latin America LLC consolidated on a line-by-line basis at
December 31, 2006 (1)
Group %
at Dec. 31, 2006
Parent company:
Enel Latin America LLC Wilmington USA - Enel Green Power International SA 100.00% 100.00%
(Delaware)
Subsidiaries:
Agricola Rio Sahuil Ltda Santiago Chile 200,000,000 CLP Agricola Y Constructora Rio 99.90% 99.90%
Guanehue SA
Agricola Y Constructora Rio Santiago Chile - Empresa Electrica Panguipulli SA 99.93%
Guanehue SA 100.00%
Enel Chile Ltda 0.07%
Alvorada Energia SA Rio de Janeiro Brazil 17,117,415.92 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Apiacàs Energia SA Rio de Janeiro Brazil 21,216,846.33 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Braço Norte Energia SA Rio de Janeiro Brazil 13,478,767.05 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Central American Power Wilmington USA 1 USD Enel Latin America LLC 100.00% 100.00%
Services Inc. (Delaware)
Conexion Energetica San Salvador El Salvador 1,693,100 SVC Grupo EGI SA de cv 99.99%
Centroamericana El Salvador
SA 100.00%
Enel Latin America LLC 0.01%

Constructora Cerro Pitren Santiago Chile 200,000,000 CLP Agricola Y Constructora Rio 99.90% 99.90%
Ltda Guanehue SA
Cuiabà Energia SA Rio de Janeiro Brazil 3,261,038.39 R$ Enel Brasil Participações Ltda 100.00% 100.00%
EGI Costa Rica Viento SA Santa Ana Costa Rica 100,000 CRC Enel de Costa Rica SA (formerly 100.00% 100.00%
Energia Global de Costa Rica SA)
Electrificadora Ecologica SA Santa Ana Costa Rica 1,200,000 CRC ZMZ General SA 100.00% 51.00%
Empresa Electrica Panguipulli Santiago Chile - Energia Alerce Ltda 0.01%
SA 100.00%
Empresa Electrica Puyehue Santiago Chile 11,169,752,000 CLP Energia Alerce Ltda 0.10%
SA 100.00%
Empresa Nacional de Santiago Chile - Enel Chile Ltda 51.00% 51.00%
Geotermia SA
Enel Brasil Participações Ltda Rio de Janeiro Brazil 466,000,000 R$ Enel Green Power International 0.01%
SA 100.00%
Enel Chile Ltda Santiago Chile 15,414,240,752 CLP Enel Latin America LLC 0.01%
100.00%
Energia Alerce Ltda 99.99%
Enel de Costa Rica SA Santa Ana Costa Rica 100,000 CRC Enel Latin America LLC 100.00% 100.00%
(formerly Energia Global de
Costa Rica SA)
Enel Guatemala SA Guatemala Guatemala 5,000 GTQ Enel Green Power International 2.00%
SA 100.00%
256
Group %
at Dec. 31, 2006
Energia Alerce Ltda Santiago Chile 1,000,000 CLP Enel Green Power International 0.10%
SA 100.00%
Energia Global Operaciones SA Santa Ana Costa Rica 10,000 CRC Enel de Costa Rica SA (formerly 100.00% 100.00%
Energia Global SA de cv Andover USA 50,000 MXN Enel Latin America LLC 99.00% 99.00%
(Massachusetts)
Generadora de Occidente Guatemala Guatemala 5,000 GTQ Enel Latin America LLC 99.00%
Ltda 100.00%
Enel Guatemala SA 1.00%
Generadora Montecristo SA Guatemala Guatemala 5,000 GTQ Enel Latin America LLC 99.00%
100.00%
Enel Guatemala SA 1.00%
Geotermica del Norte SA Santiago Chile - Enel Chile Ltda 51.00% 51.00%
Globyte SA San José Costa Rica 90,000 CRC Enel de Costa Rica SA 10.00% 10.00%
Costa Rica SA)
Grupo EGI SA de cv San Salvador El Salvador 200,000 SVC Enel Green Power International 0.05%
SA 100.00%
Isamu Ikeda Energia SA Rio de Janeiro Brazil 82,974,475.77 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Molinos de Viento del Arenal Santa Ana Costa Rica 9,709,200 USD Electrificadora Ecologica SA 49.00% 24.99%
SA
Operacion Y Mantenimiento Santa Ana Costa Rica 30,000 CRC Electrificadora Ecologica SA 85.00% 43.35%
Tierras Morenas SA
P.H. Don Pedro SA Santa Ana Costa Rica 100,001 CRC Enel de Costa Rica SA 33.44% 33.44%
Costa Rica SA)
P.H. Guacimo SA Santa Ana Costa Rica 50,000 CRC Enel Latin America LLC 30.00%
Enel de Costa Rica SA (formerly 10.00% 40.00%
P.H. Rio Volcan SA Santa Ana Costa Rica 100,001 CRC Enel de Costa Rica SA (formerly 34.32% 34.32%
Primavera Energia SA Rio de Janeiro Brazil 29,556,575.78 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Quatiara Energia SA Rio de Janeiro Brazil 12,148,511.80 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Socibe Energia SA Rio de Janeiro Brazil 33,969,032.25 R$ Enel Brasil Participações Ltda 100.00% 100.00%
Tecnoguat SA Guatemala Guatemala 1,000,000 GTQ Enel Latin America LLC 75.00% 75.00%
Vale Energética SA Rio de Janeiro Brazil 18,589,343.63 R$ Enel Brasil Participações Ltda 100.00% 100.00%
VP Energia SA Rio de Janeiro Brazil 12,137,505.52 R$ Enel Brasil Participações Ltda 100.00% 100.00%
ZMZ General SA Santa Ana Costa Rica 500,000 CRC EGI Costa Rica Viento SA 51.00% 51.00%
(1) All the companies are engaged in electricity generation from renewable resources.
(2) In many cases, the subsidiaries are formed as entities that do not require the payment of share capital.
(3) For companies in which the holding is less than 50% Enel Latin America LLC holds preference shares that enable it to determine the financial and operational
policies of the company and therefore to exercise a dominant influence.
257
Companies consolidated proportionally at December 31, 2006
Registered Group %
at Dec. 31, 2006
Americas Generation Panama Panama Holding company 3,000 USD Americas Holding 100.00% 50.00%
Corporation Corporation
Americas Holding Panama Panama Holding company 3,000 USD Enel Panama Ltd 50.00% 50.00%
Corporation
Aridos Energias Villalbilla Spain Electricity generation from 600,000 Euro Enel Unión Fenosa 41.05% 20.53%
Especiales SL renewable resources Renovables SA
Azucarera Energias SA Madrid Spain Electricity generation from 570,600 Euro Enel Unión Fenosa 40.00% 20.00%
renewable resources Renovables SA
Boiro Energia SA Boiro Spain Electricity generation from 601,010 Euro Enel Unión Fenosa 40.00% 20.00%
renewable resources Renovables SA
Cogeneración del Santiago de Spain Electricity generation from 3,606,000 Euro Enel Unión Fenosa 40.00% 20.00%
Noroeste SL Compostela renewable resources Renovables SA
Depuración Destilación Boiro Spain Electricity generation from 600,000 Euro Enel Unión Fenosa 40.00% 20.00%
Reciclaje SL renewable resources Renovables SA
Empresa de Generación Panama Panama Electricity generation from 309,457,729 USD Americas Generation 49.00% 24.50%
Electrica Fortuna SA renewable resources Corporation
Enel Unión Fenosa Madrid Spain Electricity generation from 32,505,000 Euro Enel Viesgo Generación SL 50.00% 50.00%
Renovables SA renewable resources
Energias Ambientales La Coruna Spain Electricity generation from 1,250,000 Euro Enel Unión Fenosa 19.40% 9.70%
de Somozas SA renewable resources Renovables SA
Energias Ambientales La Coruna Spain Electricity generation from 15,491,460 Euro Enel Unión Fenosa 33.34% 16.67%
EASA SA renewable resources Renovables SA
Energias de Villarrubia Barcelona Spain Electricity generation from 3,010 Euro Enel Unión Fenosa 20.00% 10.00%
SL renewable resources Renovables SA
Energias Especiales Madrid Spain Electricity generation from 82,000 Euro Enel Unión Fenosa 50.00% 25.00%
Alcoholeras SA renewable resources Renovables SA
Energias Especiales de Seville Spain Electricity generation from 20,000 Euro EUFER Renovables 100.00% 50.00%
Andalucía SL renewable resources Ibéricas 2004 SA
Energias Especiales de La Coruna Spain Electricity generation from 270,450 Euro Enel Unión Fenosa 77.00% 38.50%
Careon SA renewable resources Renovables SA
Energias Especiales de Madrid Spain Electricity generation from 437,400 Euro Enel Unión Fenosa 100.00% 50.00%
Castelo SA renewable resources Renovables SA
Energias Especiales de Badajoz Spain Electricity generation from 6,000 Euro Enel Unión Fenosa 100.00% 50.00%
Extremadura SL renewable resources Renovables SA
Energias Especiales de Madrid Spain Electricity generation from 963,300 Euro Enel Unión Fenosa 80.00% 40.00%
Pena Armada SA renewable resources Renovables SA
Energias Especiales del Madrid Spain Electricity generation from 360,600 Euro Enel Unión Fenosa 100.00% 50.00%
Alto Ulla SA renewable resources Renovables SA
Energias Especiales del Torre del Spain Electricity generation from 1,635,000 Euro Enel Unión Fenosa 50.00% 25.00%
Bierzo SA Bierzo renewable resources Renovables SA
Energias Especiales del Madrid Spain Electricity generation from 6,812,040 Euro Enel Unión Fenosa 100.00% 50.00%
Noroeste SA renewable resources Renovables SA
Energias Renovables Madrid Spain Electricity generation from 705,000 Euro Enel Unión Fenosa 100.00% 50.00%
Montes de San renewable resources Renovables SA
Sebastián SL
258
Registered Group %
at Dec. 31, 2006
Enerlasa SA Madrid Spain Electricity generation 1,021,700 Euro Enel Unión Fenosa 45.00% 22.50%
from renewable Renovables SA
resources
Eólica del Cordal de Madrid Spain Electricity generation 160,000 Euro Enel Unión Fenosa 100.00% 50.00%
Montouto SL from renewable Renovables SA
resources
EUFER Madrid Spain Electricity generation 60,000 Euro Enel Unión Fenosa 100.00% 50.00%
Comercializadora SL from renewable Renovables SA
resources
EUFER Renovables Madrid Spain Electricity generation 8,100,000 Euro Enel Unión Fenosa 100.00% 50.00%
Ibéricas 2004 SA from renewable Renovables SA
resources
Gallega de Santiago de Spain Electricity generation 1,803,000 Euro Enel Unión Fenosa 40.00% 20.00%
Cogeneración SA Compostela from renewable Renovables SA
resources
Nizhegorodskaya Nizhniy Russian Electricity sales 29,006,540.64 Ruble Res Holdings BV 62.29% 30.83%
sbytovaya kompaniya Novgorod Federation
OJSC
Parque Eólico de Santiago de Spain Electricity generation 3,606,000 Euro Enel Unión Fenosa 25.00% 12.50%
Barbanza SA Compostela from renewable Renovables SA
resources
Parque Eólico de La Coruna Spain Electricity generation 950,057.50 Euro Enel Unión Fenosa 30.16% 15.08%
Malpica SA from renewable Renovables SA
resources
Parque Eólico de San La Coruna Spain Electricity generation 552,920 Euro Enel Unión Fenosa 82.00% 41.00%
Andrés SA from renewable Renovables SA
resources
Parque Eólico La Losilla Madrid Spain Electricity generation 60,400 Euro EUFER Renovables 100.00% 50.00%
SA from renewable Ibéricas 2004 SA
resources
Parque Eólico Montes Madrid Spain Electricity generation 6,540,000 Euro Enel Unión Fenosa 20.00% 10.00%
de las Navas SA from renewable Renovables SA
resources
Parque Eólico Sierra del Cáceres Spain Electricity generation 30,000 Euro Enel Unión Fenosa 50.00% 25.00%
Merengue SL from renewable Renovables SA
resources
Prius Enerólica SL Madrid Spain Electricity generation 3,600 Euro Enel Unión Fenosa 100.00% 50.00%
resources
Promociones Ponferrada Spain Electricity generation 12,020 Euro Enel Unión Fenosa 50.00% 25.00%
Energeticas del Bierzo from renewable Renovables SA
SL resources
Proyectos Universitarios Alicante Spain Electricity generation 180,000 Euro Enel Unión Fenosa 33.33% 16.67%
de Energias Renovables from renewable Renovables SA
SL resources
Res Holdings BV Amsterdam Netherlands Holding company 18,000 Euro Enel Investment Holding 49.50% 49.50%
BV
RUSENERGOSBYT C Khanty- Russian Electricity sales 5,100 Ruble Res Holdings BV 51.00% 25.25%
LLC Mansiyskiy Federation
RUSENERGOSBYT Moscow Russian Electricity trading 2,760,000 Ruble Res Holdings BV 100.00% 49.50%
LLC Federation
RUSENERGOSBYT M Moscow Russian Electricity sales 7,500 Ruble Res Holdings BV 75.00% 37.13%
LLC Federation
Sistemas Energeticos Ortigueira Spain Electricity generation 4,507,500 Euro Enel Unión Fenosa 86.00% 43.00%
Mañón Ortigueira SA from renewable Renovables SA
resources
Sotavento Galicia SA Santiago de Spain Electricity generation 601,000 Euro Enel Unión Fenosa 18.00% 9.00%
Compostela from renewable Renovables SA
resources
Tirmadrid SA Valdemingómez Spain Electricity generation 16,828,000 Euro Enel Unión Fenosa 18.64% 9.32%
resources
Ufefys SL Aranjuez Spain Electricity generation 2,373,950 Euro Enel Unión Fenosa 40.00% 20.00%
resources
259
Associated companies accounted for using the equity method at December 31, 2006
Registered Group %
at Dec. 31, 2006
Aes Distribuidores San Salvador El Salvador Electricity generation from 200,000 SVC Grupo EGI SA de cv 20.00% 20.00%
Salvadoreos Ltda de cv renewable resources
Aes Distribuidores San Salvador El Salvador Electricity generation from 200,000 SVC Grupo EGI SA de cv 20.00% 20.00%
Salvadoreños Y renewable resources
Compania S. en C. de
cv
Alpe Adria Energia SpA Udine Italy Engineering, construction 450,000 Euro Enel Produzione SpA 40.50% 40.50%
and management of
interconnection power
lines
Cesi - Centro Milan Italy Research and testing 8,550,000 Euro Enel SpA 25.92% 25.92%
Elettrotecnico
Sperimentale Italiano
Giacinto Motta SpA
Chladiace veže Bohunice Slovakia Engineering and 500,000 SKK Slovenské elektrárne AS 35.00% 23.10%
Bohunice, spol. sro construction
Compagnia Porto di Rome Italy Harbor construction 20,516,000 Euro Enel Produzione SpA 25.00% 25.00%
Civitavecchia SpA
Eneco Energia Predazzo Italy Area heating networks 1,716,586 Euro Avisio Energia SpA 25.73% 25.69%
Ecologica Srl (Trento)
Enel Kansas LLC Wilmington USA Electricity generation from - Enel North America Inc. 100.00% 100.00%
(Delaware) renewable resources
Hipotecaria de Santa San Salvador El Salvador Electricity generation from 100,000 SVC Grupo EGI SA de cv 20.00% 20.00%
Ana Ltda de cv renewable resources
Idrosicilia SpA Palermo Italy Water sector 22,520,000 Euro Enel SpA 40.00% 40.00%
Reaktortest sro Trnava Slovakia Nuclear power research 2,000,000 SKK Slovenské elektrárne AS 49.00% 32.34%
SIET - Società Piacenza Italy Studies, design and 697,820 Euro Enel.NewHydro Srl 41.55% 41.55%
Informazioni Esperienze research in thermal
Termoidrauliche SpA generation
Star Lake Hydro St. John Canada Electricity generation from - Chi Hydroelectric 49.00% 49.00%
Partnership (Newfoundland) renewable resources Company Inc.
Trade Wind Energy LLC Dallas U.S.A. Electricity generation from - Enel Kansas LLC 45.00% 45.00%
(Texas) renewable resources
Ústav jaderného Řež Czech Nuclear power research 524,139,000 CZK Slovenské elektrárne AS 27.78% 18.33%
výzkumu Řež AS Republic and development
260
Other significant equity investments at December 31, 2006
Registered Group %
at Dec. 31, 2006
CO.FA.S.E. Srl Canazei Italy Cogeneration of electrical 25,500 Euro Avisio Energia SpA 14.00% 13.98%
(Trento) and thermal energy
Energotel AS Bratislava Slovakia Management of fiber optic 66,000,000 SKK Slovenské elektrárne AS 16.67% 11.00%
network
GALSI SpA Milan Italy Engineering in energy and 838,000 Euro Enel Produzione SpA 13.50% 13.50%
infrastructure sector
International Multimedia Rome Italy Distance learning 24,000 Euro Sfera - Società per la 13.04% 13.04%
University Srl formazione e le risorse
aziendali Srl
LaGeo SA de cv Ahuachapan El Salvador Electricity generation from 1,868,695,400 SVC Enel Produzione SpA 12.50% 12.50%
renewable resources
261
Companies in liquidation or held for sale at December 31, 2006
Registered Group %
at Dec. 31, 2006
Climare Scrl Genoa Italy - 30,600 Euro Enel Distribuzione SpA 66.66% 66.66%
(in liquidation)
Euromedia Luxembourg Luxembourg Luxembourg - 44,887,500 USD Enel Investment Holding 28.57% 28.57%
One SA (in liquidation) BV
Hydrodev Limited Montreal Canada Electricity generation from - Chi Canada Inc. 48.90%
Partnership (Quebec) renewable resources 49.00%
Hydrodev Inc. 0.10%
Q-Channel SpA Rome Italy - 1,607,141 Euro Enel Servizi Srl 24.00% 24.00%
(in liquidation)
Slovenské elektrárne Brno Czech - 200,000 CZK Slovenské elektrárne AS 100.00% 66.00%
CR sro (in liquidation) Republic
Vodné dielo Žilina AS Trenčín Slovakia - 5,000,000 SKK Slovenské elektrárne AS 40.00% 26.40%
(in liquidation)
262
Glossary
Glossary
Cash-generating unit
The smallest identifiable group of assets that generates a positive cash flow that is
highly independent from positive cash flows generated by other assets or groups of
assets.
Deemed cost
Amount used as substitute of cost or amortized cost at a given date. Subsequent
amortization is calculated based on the assumption that the entity had initially recorded
the asset or liability at that date and the cost coincided, also at the same date, with the
deemed cost.
Discontinued operations and continuing operations

Discontinued operation: a component of an entity that has either been disposed of or
classified as held for sale and:
represents a significant independent business or geographical area in which the
business operates;
is part of a larger plan for the disposal of an autonomous business unit or a
geographical area of operations;
is a subsidiary acquired exclusively to be resold.
Continuing operations represent ongoing businesses that are not being held for sale.
Fair value
The amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.
Impairment loss
The amount by which the book value of an asset exceeds its recoverable value.
Ke
This represents the opportunity cost of shareholders. It is measured as the risk-free
rate increased by the premium expected by equity investors.
264
Special purpose entity
These are companies formed by a sponsor company for the purpose of achieving a
specific, well-defined objective.
Weighted Average Cost of Capital (WACC)

The weighted average cost of financing, capital and debt relating to a specific
company, generally calculated on the basis of an existing or ideal long-term financial
structure.
265
Disclaimer
The 2006 Annual Report issued in Italian has been
translated into English solely for the convenience of international readers.
Enel
Società per azioni
Registered office in Rome, Italy
Viale Regina Margherita, 137

Enel DF 2006

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Enel DF 2006

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ANNUAL REPORT 2006

The Consolidated Financial Statements of the Enel Group included in this

Consolidated financial statements

Notes to the financial statements ........................................................................... 118

Glossary ................................................................................................................... 264

> Enel Distribuzione > Enel Produzione > Enel Distribuzione

> Enel.si > Enel Sole

> Deval > Deval

> Slovenské elektrárne > Enel Electrica Banat > Sfera

> Enel North America > Enel Servicii > Enel.NewHydro

> RusEnergoSbyt > Erelis

Board of Directors Board of Auditors

Chief Executive Officer and General Manager Auditors

Chairman of the Board of Directors

Chief Executive Officer

Dear shareholders and stakeholders,

Domestic Sales Division

Domestic Generation and Energy Management Division

Domestic Infrastructure and Networks Division

Enel is strengthening its presence in Spain, where we have launched an investment

The Chief Executive Officer

Income data (millions of euro)

Financial data (millions of euro)

Per share data (euro)

Net electricity generated by Enel (TWh) 131.4 125.7

(2) Excluding discontinued operations.

(3) Excluding sales to resellers.

(5) Platt's CIF Med index.

Domestic Sales 21,108 19,487 175 152 2 12

Total 38,513 33,787 8,019 7,745 5,819 5,538

Millions of euro Operating assets Operating liabilities Capital expenditure

Domestic Sales 6,948 6,465 6,272 5,289 56 53

Total 50,015 43,851 17,889 14,369 2,963 2,829

Domestic Sales 5,176 5,994

Total 58,548 51,778

Gross operating margin per share (euro) 1.30 1.26

(2) Calculated on Group net income.

(3) Calculated on average share price in December.

Enel stock weighting in:

Standard & Poor's Outlook Negative Negative Stable Stable

Moody's Outlook Negative Stable Stable Stable

(1) Figures updated to March 14, 2007.

Volume ENEL IM Equity E3ELEC Index MIB30 Index SPMIB Index

Disposal of stake in Wind

Disposal of stake in Weather

Sale of Carbones Colombianos del Cerrejón

Disposal of 30% of Enel Unión Fenosa Renovables

Tender for part of Romanian electricity grid

Acquisition of holding in RusEnergoSbyt, a Russian electricity trader

Disposal of power distribution and sale assets

Acquisition of wind plants in France

Acquisition of gas distribution and sales business in Sicily

Acquisition of hydroelectric plants in Panama

Interim dividend for 2006 approved

Acquisition of a relative majority stake in TradeWind Energy LLC

Acquisition of an additional 25% of Enelco

Acquisition of generation capacity in Brazil

Acquisition of 195 wind generators

The “Bersani” bill

General costs of the electricity system

Long-term electricity import contracts

Domestic electricity generation and demand